P&CIllinoismedium
When developing P&C rates in Illinois under the standard in 215 ILCS 5/424, which combination of factors must an insurer consider for actuarial soundness?
AOnly the insurer's prior-year loss ratio
Past and prospective loss experience, expenses, investment income, and a reasonable profit and contingency provision
CThe General Assembly's annual rate cap
DThe advisory organization's most recent filing, with no modification
Why this is the answer
Actuarial soundness under 215 ILCS 5/424 requires Illinois P&C insurers to ground rates in past and prospective loss experience, operating expenses (including acquisition, general expenses, taxes, licenses, and fees), investment income on policyholder-supplied funds, and a reasonable provision for underwriting profit and contingencies. Reliance on a single factor — such as last year's loss ratio or an advisory organization filing — does not by itself satisfy the standard.
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