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Foundations of Casualty Actuarial Science

clauses of US Constitution are applicable. Generally,
however, courts have been very deferential towards
insurance legislatures and their regulations. Most likely,
statutory regulations on rating variables would be
constitutional.

Regulations issued by state insurance departments may
affect classifications. Under a constitutional theory, only
the legislature may promulgate substantive law, the
executive branch merely carries out the will of the
legislature.

Although states vary considerably, broad discretionary
grants of power to executive agencies may be found
unconstitutional. This insurance commissioners may only
be able to act within the guidelines provided by
legislatures.

e) Abolition of rating variables - Legislatures may
sometimes abolish the use of certain rating variables or
restrict rate variations. The consequences will be similar
for each, although more extreme for abolition. The

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