In which type of state must insurance companies obtain official approval before using new forms and rates?

In Prior Approval States, insurance companies are required to obtain official approval from the state insurance department before they can implement new forms and rates. This regulatory requirement is designed to protect consumers by ensuring that the rates and policy forms being offered are adequate, not discriminatory, and not unfairly discriminatory. This pre-approval process allows state regulators to assess the adequacy and fairness of insurance pricing and policy terms before they go into effect, which helps maintain a level of oversight and consumer protection.

In contrast, other types of states, such as File and Use States and Open Competition States, allow companies to file their new forms and rates with the state but may not require prior approval before they are used. In No Approval States, there is minimal regulation, and companies can implement changes without prior governmental oversight, which does not allow the same level of consumer protection as found in Prior Approval States.