WHAT IS A RATING ORGANIZATION?

A rating organization receives and analyzes and interprets data (statistical data, past and present loss experience, catastrophe hazards, insurer expenses and other outlays) and determines a rating system (manual of risk classifications, rules and rates, and rating plan) applicable to a type of insurance.  Insurers that are members of a rating organization must use the rating organization's rating system as their own except that an insurer may file a "deviation," which is either a uniform percentage increase or decrease to the rating system, or changes from the rate rule established for a classification of risk to reflect the risk profile for a more specific subcategory of risk.