P&CPennsylvaniamedium
Which of the following best describes an 'unfairly discriminatory' rate under 40 P.S. § 1183?
AAny rate that varies between two insureds
BA rate higher than the PCRB advisory loss costs
CA rate that produces a small underwriting profit for the insurer, even when the rate structure otherwise reflects equitably the differences in expected losses and expenses among insureds
A rate that charges different premiums to risks of essentially the same expected loss and expense without an actuarial basis
Why this is the answer
Under 40 P.S. § 1183, a rate is unfairly discriminatory when price differences between insureds do not reflect actual differences in expected losses, expenses, or hazard. Fair classification based on actuarially supported factors is permitted; charging more for similar risks based on impermissible factors or no rational basis is prohibited. Rate variation alone, or merely exceeding PCRB loss costs, is not unfair discrimination.
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