N.Y. Comp. Codes R. & Regs. Tit. 11 § 52.44 - Standards for annual filing of experience data

(a) Policies issued after June 21, 1981, at ages 65 and over.

In order to monitor the claims experience of all policies, other than a group or group remittance policy which provides continued coverage for persons beyond age 65, issued to persons aged 65 or over, including Medicare supplement insurance, insurers must file with the superintendent experience data annually in accordance with the following rules:

(1) The experience data shall be submitted to the superintendent by May first of each year.

(2) The experience data shall consist of the following for each calendar year since inception, for all calendar years combined, and for all years accumulated at the interest assumptions used in the applicable expected future loss ratio calculation:

(i) written or paid premiums;

(ii) each reserve component (i.e., the increase in premium reserves, policy reserves, and claim reserves and liabilities, and the assumptions used in computing these reserves);

(iii) earned premium;

(iv) paid claims;

(v) incurred claims;

(vi) dividends to policyholders; and

(vii) premium refund or credit as required by subdivision (c) of this section.

The above terms are as defined in the current instructions for Completion of the Life and Accident and Health Annual Statement.

(3) The experience data required by paragraph (2) of this subdivision shall be submitted to the superintendent in the following form and shall clearly specify whether the experience reported is nationwide or for New York State only:

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(b) Individual policies issued prior to June 21, 1981, at ages 65 and over, and individual policies, regardless of issue date, issued at ages under 65.

Carriers must monitor the experience data required by subdivision 52.43(a) of this Part, using the methods and standards of this subdivision, for each calendar year.

(1) Calculation of expected loss ratio.

(i) Durational calculations.

(a) For policy forms issued on or after the effective date of the ninth amendment to this regulation, expected loss ratios for each duration, as most recently filed under section 52.40(d)(1)(x) or 52.40(d)(2)(viii) of this Part, are to be multiplied by the premium earned in that duration for that calendar year. Previously approved approximations may be used in lieu of earned premium by duration.

(b) For policies issued only before the above date, the expected loss ratio is the minimum anticipated loss ratio in effect at the time the policy was issued. Separate calculations by duration are thus unnecessary.

(c) For policies issued when no minimum loss ratio standard was in effect, the expected loss ratio is the anticipated loss ratio, if any, filed with the department. Separate calculations by duration are thus unnecessary.

(ii) The products are to be summed over all durations for the calendar year.

(iii) The ratio for the sum from (ii) to earned premiums shall equal the expected loss ratio, for purposes of this subdivision, for that year. If the disclosure loss ratio is less than the filed expected future loss ratio, then the expected loss ratio in the prior sentence is to be multiplied by the ratio of the disclosure loss ratio to the filed expected future loss ratio.

(2) Applying the monitoring standards.

(i) A policy form providing the following coverage shall be deemed a Scale I policy form:

(a) disability income policies which are guaranteed renewable or noncancellable, and where one half or more of the current premium income is collected on coverage of disability periods of five years or more; and

(b) policy forms providing major medical insurance, as it is currently defined in section 52.7 of this Part.

(ii) All other policy forms are deemed Scale II policy forms.

(iii) The ratio of the actual loss ratio, calculated as described in paragraph (a)(3) of this section, to the expected loss ratio defined in paragraph (1) of this subdivision, shall determine the necessity of corrective action, according to the following:

Number of reported claims in the period	Ratio indicating insurer action is necessary
Scale I	Scale II
1,000 or more	.80 or less	.90 or less
100 - 999	.65 or less	.80 or less
25-99	.50 or less	.65 or less
0-24	0 or less	0 or less

The number of claims shall be determined on a nationwide basis, unless prior approval is received of an alternate basis from the superintendent.

(iv) The loss ratios for Scale I policy forms shall be based on the sum of the most recent two-years' experience. The loss ratios for Scale II policy forms shall be based on the most recent one-year's experience. All policy forms are exempt from the monitoring requirements of paragraph (2) of this subdivision, in the year immediately following the first sale of the policy form.

(v) It is expected that each insurer will carefully monitor those ratios which exceed 100 percent, so that plans for increased premium rates can be submitted on a timely basis.

(3) Insurer action required by this section.

(i) A preliminary plan outlining the policy forms which require insurer action shall be made by July 1st of the year following the year being analyzed. If, in the opinion of the company's actuary, the deviation of actual from expected is due to unusual reserve fluctuations, economic conditions, or other nonrecurring conditions, the preliminary plan should include that opinion, with appropriate justification. In such a case, the superintendent may exempt the policy form from the need for a corrective plan for that year. Filing of the corrective plan itself shall be made by the later of October 1st or three months from the date of denial of the exemption, and must contain the information required under section 52.40(d)(2) of this Part.

(ii) Such a corrective plan for policies which are not noncancellable shall include a plan utilizing premium reductions, dividends, benefit increases, or any combination of these or other methods such that the disclosure loss ratio can reasonably be expected to be achieved; however, such plan is subject to approval by the superintendent. In most instances, benefit increases may not be included as part of the insurer's plan without offering the alternative option of appropriate premium reduction. Failure to submit such a plan within the required time period will be a violation of this regulation and will subject the insurer to the penalties of section 109 of the Insurance Law.

(iii) Such a corrective plan for policies which are noncancellable shall include a demonstration of the continued reasonableness of the benefits in relation to premiums, thereby justifying continued use of the policy form.

(c) Premium refund or credit calculation for individual and group Medicare supplement policies.

The following rules shall be applicable in addition to the other requirements of subdivision (a) of this section.

(1) An issuer shall collect and file with the superintendent by May 1st of each year the data contained in the applicable reporting form and refund calculation form contained in section 52.28 of this Part for each type in a standard Medicare supplement benefit plan.

(i) Except as provided in subparagraph (ii) of this paragraph, the experience of all policy forms or certificate forms of the same type in a standard Medicare supplement benefit plan shall be combined for purposes of the refund or the credit calculation prescribed in this section.

(ii) Forms assumed under an assumption reinsurance agreement shall not be combined with the experience of other forms for purposes of the refund or credit calculation.

(2) If on the basis of the experience as reported the benchmark ratio since inception (ratio 1) exceeds the adjusted experience ratio since inception (ratio 3), then a refund or credit calculation is required. The refund calculation shall be done for all policies and/or certificates delivered or issued for delivery in New York State for each type in a standard Medicare supplement benefit plan. For purposes of the refund or credit calculation, experience on policies issued within the reporting year shall be excluded.

(3) For policies or certificates issued prior to May 1, 1992, the issuer shall make the refund or credit calculation separately for all individual policies combined and all group policies combined for experience after May 1, 1996. The first such report shall be due by May 1, 1998.

(4) A refund or credit shall be made only when the benchmark loss ratio exceeds the adjusted experience loss ratio and the amount to be refunded or credited exceeds a de minimus level. Such refund shall include interest from the end of the calendar year to the date of the refund or credit at a rate specified by the Secretary of Health and Human Services, but in no event shall it be less than the average rate of interest for 13-week treasury notes. A refund or credit against premiums due shall be made by September 30th following the experience year upon which the refund or credit is based.

(5) If an issuer fails to make premium adjustments acceptable to the superintendent, the superintendent may order premium adjustments, refunds or premium credits deemed necessary to achieve the loss ratio required by section 52.45(i) of this Part.

Notes

N.Y. Comp. Codes R. & Regs. Tit. 11 § 52.44