02-031 C.M.R. ch. 281, § 5 - Rates

A. Except as provided in subsection B below, the premium for the converted individual policy or group certificate shall be no greater than the standard claim cost, as defined in subsection C below, divided by 0.55. This premium shall not be increased until the policy or certificate has been in force for at least twelve months, except if all of the following conditions are met:

(1) Conversion is provided through a form which is also issued to individually underwritten standard risks.

(2) More than 50 percent of the policyholders of that form are individually underwritten standard risks.

(3) The premium increase has been filed pursuant to Title 24 M.R.S.A., Section2321 or Title 24-A M.R.S.A., Section2736.

B. If an insurer experiences renewal incurred losses on conversion policies for a period of two years, or one year if renewal earned premiums in that year exceed $100,000, which exceed renewal earned premiums by more than 20 percent, the insurer may file with the Superintendent of Insurance amended renewal rates which will produce a loss ratio of not less than 120 percent. For purposes of this subsection, "renewal" refers to individual policies or group certificates which have been in force at least twelve months. Rates filed under this subsection shall apply only to renewal policies.

C. "Standard claim cost" as used in subsection A means the claim cost which would be appropriate for use in pricing a policy for an individually underwritten standard risk of the same age and class of risk as the person to be covered by the converted policy or certificate.

Notes

02-031 C.M.R. ch. 281, § 5