Prior approval

Under prior approval, an insurer files its proposed rates and waits. The regulator reviews whether they are adequate, not excessive and not unfairly discriminatory, and can ask for more data, negotiate changes or reject the filing. The insurer may not charge the new rates until the department signs off. Some prior-approval states add a deemer clause, under which a filing counts as approved if the regulator has not acted within a set number of days.

California is the best-known example. Proposition 103, which voters passed in 1988, bars insurers from using new rates until the Department of Insurance approves them. For personal lines such as homeowners, a consumer challenge to an increase above 7% triggers a public hearing under Proposition 103's rules. That threshold is why some insurers have requested increases just under it.

Supporters say the system holds down prices and exposes the data behind them. Critics, including many insurers, say review delays leave rates inadequate when costs and catastrophe losses are rising, which can push companies to limit new business. For a homeowner, approval means the filing was scrutinized, not that the increase is small. Compare it with file and use and use and file, read the prior approval vs file-and-use guide, and look up your own insurer's pending filing through the state's rate filing records.