Adequate rate maintenance is the cornerstone of an insurance carrier’s profitability, solvency and overall business health. Since there is a clear and traceable relationship between policy premiums and claims payments, the end result goes straight to a carrier’s bottom line. Maintaining appropriate rates is about more than just being able to pay out on claims. It’s about structuring an insurance business to meet future growth goals. Without careful monitoring, indications of inadequate rates might not show up immediately but can have disastrous consequences in the future.

When carriers maintain adequate rates, they are able to file regularly for smaller changes over shorter periods of time. When they fail to act for a sustained period and are subsequently forced to implement major premium hikes, carriers risk alienating policyholders and attracting additional scrutiny from state insurance departments....

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