rate and form filing
Before an insurer can sell you a policy, two questions concern the regulator: what does the contract actually say (the 'form'), and how much will it charge (the 'rate')? Because insurance is bought on trust and consumers can't easily judge a complex contract or whether a price is fair, many lines of insurance require the company to submit both for regulatory review. That submission is the rate and form filing.
A form filing is the policy contract language and related documents — the actual wording of coverages, exclusions, and conditions — submitted so the regulator can check it is legal, not deceptive, and meets minimum standards. A rate filing is the proposed prices together with the actuarial support: the data, assumptions, trend, and loss experience justifying why the rates are adequate (enough to pay claims and expenses), not excessive, and not unfairly discriminatory — the three classic standards. Review regimes vary: under 'prior approval' the insurer must wait for the regulator's sign-off before using the rates; under 'file-and-use' it may begin using them upon filing; some states use 'use-and-file' or have no filing at all for certain lines. An actuary typically signs or supports the rate filing, attesting that the indicated rates meet the standards.
Why it matters: rate and form filing is the front line where actuarial pricing meets regulation and the public interest, especially in personal lines like auto and homeowners and in health insurance. A common misconception is that 'not unfairly discriminatory' means rates must be the same for everyone — it does not. It means price differences must reflect genuine, actuarially supported differences in expected cost; charging a higher rate for a higher-risk class is permitted, while charging differently for reasons unrelated to risk (or for prohibited characteristics) is not.
An auto insurer files for a 6 percent average rate increase, backing it with loss-development data and trend analysis from its actuary. In a prior-approval state it cannot raise rates until the regulator agrees; in a file-and-use state it may apply the new rates immediately while the regulator reviews after the fact.
Rates must be adequate, not excessive, and not unfairly discriminatory — and supported with actuarial evidence.
'Not unfairly discriminatory' does not mean identical prices for all; it means price differences must reflect real, actuarially justified cost differences, not prohibited or risk-irrelevant factors.