Arizona Revised Statutes Title 20. Insurance § 20-2211. Rates; actuary

A. The rates, rating plans, rating rules, rating classifications and territories applicable to insurance written by the association, and the statistics relating thereto, are subject to the provisions of chapter 2, article 4.1 of this title,  1 giving consideration to the past and prospective loss and expense experience for the designated class or classes of liability insurance, trends in the frequency and severity of losses, the investment income of the association and other relevant information. The premium rates for an occurrence policy and a claims-made policy for each year the association issues policies shall be established by the association. In determining whether the association's rates are not inadequate, excessive or unfairly discriminatory, the director shall consider recommendations made by the actuary. All rates shall be on an actuarially sound basis, giving consideration to the group retrospective rating plan, and shall be calculated to be self-supporting, except that the total initial expenses necessary to establish, commence and manage operations may be amortized over a period of at least five years. Such rates shall be deemed not inadequate if they are so constituted that the expenses and loss costs of the plan of operation are equal to or exceeded by the premium. Competition or lack of competition shall not be considered as a rating standard under this section.

B. All policies issued by the association are subject to a group retrospective rating plan under which the final premium for all policyholders of the association, as a group, shall be equal to administrative, servicing and contingency expenses, modified as applicable in accordance with subsection A, loss and loss adjustment expenses, and taxes. Policyholders shall be given full credit for all investment income, net of expenses and a reasonable management fee on policyholder supplied monies. The maximum final premium for all policyholders of the association, as a group, is limited as provided in this chapter.

C. The director shall examine the association as often as he deems appropriate to ensure that the group retrospective rating plan is being operated in a manner consistent with this section. If he finds that it is not being so operated, he shall issue an order to the association, specifying in what respect its operation is deficient and stating what corrective action shall be taken.