Rates are required to be adequate, not excessive, and not unfairly discriminatory. A rate meets the adequacy test when it:
Explanation
A rate is built from the expected loss cost plus expenses plus an allowance for profit and contingencies, so adequacy asks whether the price will fund the losses and costs of the class and keep the insurer solvent. Not excessive means the price is not unreasonably high for the coverage given, and not unfairly discriminatory means insureds with similar loss potential are charged similarly, which is not the same as charging everyone the same amount.
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