In the context of insurance, what does "file and use" allow companies to do?

In the context of insurance, "file and use" refers to a regulatory framework that allows insurance companies to implement new rates and forms as soon as they submit their filings to the regulatory authorities. This means that once the insurer files their proposed changes, they can start using them immediately without waiting for prior approval from the regulators.

This method is designed to increase the efficiency of the insurance market by allowing companies to respond quickly to changes in the market, claims experience, and overall economic conditions. By enabling immediate utilization of new rates and forms, companies can better manage their risk and adapt to evolving market demands, which is especially important in a dynamic industry like insurance.

The other options do not accurately reflect the principles of "file and use." For example, changing policies without notice does not align with regulatory requirements meant to protect consumers, while obtaining prior approval would describe a different system, known as "prior approval," which requires insurers to wait for regulatory consent before implementing changes. Filing once a year does not pertain to the options available under the "file and use" system, which allows for more frequent adjustments based on market needs.