Cal. Code Regs. tit. 10, § 2644.8 – Projected Defense and Cost Containment Expenses.

(a) The meaning of the term “projected defense and cost containment expenses (DCCE)” includes both the company's noncatastrophe historic costs associated with the defense and cost containment of noncatastrophe claims, developed and trended in the manner described in Sections 2644.6 and 2644.7, and the company's costs associated with the defense and cost containment of catastrophe claims, as prescribed in Section 2644.5.
1. (1) DCCE associated with noncatastrophe losses shall be developed:
  1. (A) separately from losses;
  2. (B) with losses; or
  3. (C) as a ratio to losses.
2. (2) DCCE associated with noncatastrophe losses shall be trended:
  1. (A) separately from losses; or
  2. (B) with losses.
3. (3) Any provision for DCCE associated with catastrophe losses shall be determined in accordance with subdivisions (a) and (b) of Section 2644.5.
(b) The insurer shall provide its data separately for loss and DCCE, and demonstrate that its selections of development and trend for DCCE are the most actuarially sound selections.
(c) The projected DCCE shall be reflected per exposure for purposes of subdivision (a)(1)(A) of Section 2644.2 and subdivision (a)(1)(A) of Section 2644.3.
(d) For professional liability and errors and omissions coverage, the insurer shall tender an alternative computation of projected DCCE, 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 DCCE in a manner specified in subdivisions (a) through (c) of this Section 2644.8 and in any other manner as may be required by the Commissioner.

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 A Certificate of Compliance must be transmitted to OAL 12-11-91 or emergency language will be repealed by operation of law on the following day.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 Repealed by operation of Government Code section 11346.1(g) (Register 92, No. 15).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 A Certificate of Compliance must be transmittted to OAL 6-15-92 or emergency language will be repealed by operation of law on the following day.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 of section heading and section 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. Amendment of subsection (b) and repealer and new subsection (c) filed 5-16-2008; operative 5-16-2008. Submitted to OAL for printing only pursuant to Government Code section 11340.9(g) (Register 2008, No. 20).

7. Change without regulatory effect amending subsection (c) 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.

8. 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).