How is the pricing of insurance products decided?

The pricing of insurance products in New Hampshire is determined by the insurance companies themselves. The New Hampshire Insurance Department regulates the insurance industry and approves rates and forms. Insurance companies must present rate and form filings to the Insurance Department for review. The Department may approve the rate or form, require modifications or reject the filing outright. Generally, the rate approved by the Insurance Department must be fair, reasonable and not excessive. The Department must consider any data and relevant information on file, keeping in mind the purpose of insurance, the risk associated with the given product, the nature of the coverages and the claim experience of the policyholders. Insurance companies use various methods to calculate rates. These methods take into account many factors, such as age, gender, driving history, vehicle type, and the value of property being insured. Rates can also be affected by factors such as inflation, the cost of claims, and other economic factors. In addition, the insurance companies are allowed to include a profit margin in their rate calculations, provided it is in line with the rate of return generally accepted by the industry. Generally, each insurer will use different methods when calculating rates and will adjust them periodically in order to meet their financial goals.

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