What type of filing requires state approval for rates on certain insurance products?

The correct answer is prior approval rate filing. This type of filing necessitates that insurance companies obtain state approval before implementing any changes to their rates for specific insurance products. The rationale behind this requirement is to ensure that rates are adequate, not discriminatory, and do not contribute to anti-competitive behavior within the market. State regulators want to protect consumers by making sure that the rates charged by insurers are justified and that they are financially viable for the insurers to provide the promised coverage.

Prior approval rate filing practices are most commonly applied to certain lines of insurance, such as health insurance or some property and casualty products, where the potential impact on consumers is substantial and can warrant regulatory oversight. By requiring prior approval, states can carefully review proposed rate changes for fairness and transparency before they take effect. This regulatory approach aims to maintain a balance between ensuring the insurer's solvency and protecting consumers from exorbitant rates.

In contrast, the other types of filings mentioned do not require the same level of regulatory scrutiny or approval: open filings typically allow for more flexibility in rate adjustments, automatic filings might enable rate changes without preemptive regulatory intervention, and rate filing exemptions can relieve certain classes of insurance from having to file rates altogether.