1. (a) Unless projected losses are based on catastrophe models as permitted pursuant to subdivision (d) of this Section 2644.4, projected losses means the insurer's historic noncatastrophe losses per exposure, adjusted by catastrophe adjustment, as prescribed in Section 2644.5, by loss development, as prescribed in Section 2644.6, and by loss trend, as prescribed in Section 2644.7.

2. (b) Projected losses shall be calculated by applying the loss development and loss trend factor separately to data from each accident year, report year or policy year, as applicable, in the recorded period.

   1. (1) For occurrence policies, projected losses shall be calculated on an accident-year basis.
   2. (2) For claims-made policies, projected losses shall be calculated on a report-year basis.
   3. (3) For mechanical breakdown and similar insurance as defined in subdivision (b) of Section 2642.7, projected losses may be calculated on a policy-year basis.
3. (c) For professional liability and errors and omissions coverage, the insurer shall, in lieu of the computation of projected losses specified in Sections 2644.5 through 2644.7, tender an alternative computation of projected losses, which the Commissioner shall approve if the Commissioner finds the projection to have been made in the most actuarially sound manner. The insurer shall also provide projected losses computed in the manner specified in Sections 2644.5 through 2644.7 and in any other manner as may be required by the Commissioner.
4. (d) For the earthquake, flood, or any other line of insurance for which projected losses are permitted to be modeled pursuant to subdivision (c) of Section 2644.4.5, projected losses may be based on catastrophe models.

Note: Authority cited: Sections 1861.01 and 1861.05, Insurance Code; and 20th Century v. Garamendi (1994) 8 Cal.4th 216. Reference: Sections 1861.01 and 1861.05, Insurance Code; and Calfarm Insurance Company v. Deukmejian (1989) 48 Cal.3d 805.

History

1. New section filed 8-13-91 as an emergency; operative 8-13-91 (Register 92, No. 3). A Certificate of Compliance must be transmitted to OAL 12-11-91 or emergency language will be repealed by operation of law on the following day.

2. Repealed by operation of Government Code section 11346.1(g) (Register 92, No. 15).

3. New section refiled 2-14-92 as an emergency; operative 2-14-92 (Register 92, No. 15). A Certificate of Compliance must be transmittted to OAL 6-15-92 or emergency language will be repealed by operation of law on the following day.

4. Repealed by operation of Government Code section 11346.1(g) and new section filed 3-15-95; operative 3-15-95. Submitted to OAL for printing only pursuant to Government Code section 11343(a)(1) (Register 95, No. 11).

5. Amendment filed 1-3-2007; operative 4-3-2007. Submitted to OAL for printing only pursuant to Government Code section 11340.9(g) (Register 2007, No. 1).

6. Change without regulatory effect amending subsection (d) filed 7-14-2021 pursuant to section 100, title 1, California Code of Regulations (Register 2021, No. 29). Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20.

7. Amendment of section and Note filed 12-12-2024 pursuant to Government Code section 11343.8; operative 12-12-2024. Submitted to OAL for filing and printing only pursuant to Government Code section 11340.9(g) (Register 2024, No. 50).