Alabama § 27-13-27 - Rate-Making and Making Rating Systems.

§ 27-13-27. Rate-Making and Making Rating Systems.

Every rating organization and every insurer which makes its own rates shall make rates that are not unreasonably high or inadequate for the safety and soundness of the insurer and which do not unfairly discriminate between risks in this state involving essentially the same hazards and shall, in rate-making and in making rating systems:

(1) Adopt basis classifications, which shall be used as the basis of all manual, minimum, class, schedule, or experience rates;

(2) Adopt reasonable standards for construction, for protective facilities and for other conditions that materially affect the hazard or peril, which shall be applied in the determination or fixing of rates;

(3) Give consideration to past experience within the state and without the state when necessary, and due consideration may be given to prospective loss experience within the state and without the state when necessary, over such period of years as appears to be fairly representative of the frequency of the occurrence of the particular hazard or peril, including, where pertinent, the conflagration and catastrophe hazards, if any; and

(4) Give consideration to all factors reasonably related to the kind of insurance involved, including a reasonable profit for the insurer and, in the case of participating insurers, to policyholders’ dividends. In the case of fire insurance, consideration shall be given to the latest available experience of the fire insurance business, other than fire insurance covering motor vehicles, during a period of not less than five years preceding the year in which rates are made or revised.