File and use rating laws let insurers put rates into effect after filing them with regulators, without waiting for prior approval. The insurer still has to file the rates, but it does not have to sit idle until the department affirmatively approves them first.
In practical terms, this system tries to balance market speed with regulatory oversight. It gives insurers more flexibility than strict prior-approval systems while still allowing the insurance department to review filings and challenge rates that are excessive, inadequate, or unfairly discriminatory.
Why the rule matters
Rate regulation affects how quickly insurers can respond to loss trends, inflation, catastrophe experience, and competitive pressure. Under file-and-use rules, carriers can move faster than they could under full prior approval, which can materially change underwriting strategy and market participation.
The tradeoff is regulatory timing. If rates take effect quickly, the department may review after implementation rather than before, which shifts part of the oversight burden into a later corrective process.
Where it fits among rating systems
File and use is one of several state rating approaches. Others include prior approval, use-and-file, flex-rating hybrids, and more open competition frameworks. The differences matter because they influence filing speed, compliance burden, and the regulator’s practical leverage over pricing.
That is why insurers pay close attention not just to rate adequacy, but also to the filing regime in each state and line of business.
Practical example
Suppose a carrier believes auto claim severity has increased sharply. In a file-and-use state, the carrier may be able to file a revised rate and begin using it sooner than it could in a strict prior-approval state. That timing difference can materially affect profitability and market appetite.