Posted On: October 29, 2007, 2:31 pm CDT

Posted By: Stat Guy

I thought that these losses will get paid out of this year's premiums, applied to this calendar year. In that sense, the hit is on the company for one year and the profit for this year will be be lower than expectations. But before rates can increase, companies will need to justify the increases with actuarial support, showing a trend that could affect the company's solvency over time, not just taking a hit on this year's profit. If a rate increase follows, it won't happen in a vacuum; there will be public hearings before a committee and everyone will know about it. If it is a once time occurrence, I can't see how it could be automatic....