E.__"Class of business" means all or a distinct grouping of small employers in accordance with this paragraph to whom the carrier provides coverage as demonstrated by the carrier's records:

(1)__A distinct grouping may only be established by the small employer carrier on the basis that the applicable health benefit plans:

(a)__Are marketed and sold through individuals and organizations that are not participating in the marketing or sale of other distinct groupings of small employers for the carrier;

(b)__Have been acquired from another carrier as a distinct grouping of plans;

(c)__Are provided through an association with membership of not less than 50 small employers that has been formed for purposes other than obtaining insurance; or

(d)__Are in a class of business that meets the requirements for exception to the restrictions related to premium rates provided in subsection 4.

(2)__A carrier may establish no more than 2 additional groupings under subparagraph (1) on the basis of underwriting criteria that are expected to produce substantial variation in the health care costs.

(3)__The superintendent may approve the establishment of additional distinct groupings upon application to the superintendent and a finding by the superintendent that such action would enhance the efficiency and fairness of the small group health plan market.

F.__"Index rate" means, for each class of business for small employers with similar case characteristics, the arithmetic average of the applicable base premium rate and the corresponding highest premium rate.