The standards referred to in section
52.40 and other applicable
sections of this Part shall be as follows:
(a)
Individual insurance.
The minimum loss ratio for such individual insurance shall
be determined according to the following table:
|
Renewal
clause*
|
|
|
Type of
coverage
|
OR
|
CR
|
GR
|
NC
|
NR
|
|
Insurance, as defined in sections
52.5,
52.6,
52.7 of this Part and other
hospital, medical, surgical coverage, including hospital indemnity
|
60%
|
55%
|
55%
|
50%
|
50%
|
|
Insurance, as defined in sections
52.12 and
52.13 of this Part
|
NA
|
NA
|
60%
|
NA
|
NA
|
|
Loss of income and other
|
60%
|
55%
|
50%
|
50%
|
50%
|
(1) OR
(Optionally Renewable): renewal is at the option of the insurance
company.
(2) CR (Conditionally
renewable): renewal can be declined by the insurance company only for stated
reasons other than deterioration of health.
(3) GR (Guaranteed Renewable): as defined in
sections
52.17(a)(6) and
52.25(b)(1) of
this Part.
(4) NC (Noncancellable):
as defined in section
52.17(a)(5) of
this Part.
(5) NR (Nonrenewable):
short-term nonrenewable with a maximum duration of one year and no contractual
renewal provision. It is expected that the minimum loss ratios applicable to
certain
policy forms in this classification may be modified under subdivision
(g) of this section.
except that if the policy form, other than long term care
insurance, nursing home insurance only, home care insurance only, and nursing
home and home care insurance, has an average annual premium less than $180, the
minimum loss ratio shall be five percentage points less than otherwise
applicable. The average annual premium per policy shall be computed by the
insurer based on an anticipated distribution of business by all applicable
criteria having a price difference, such as age, sex, amount, dependent status,
rider frequency, etc.
(b)
Franchise insurance issued to ages
under 65.
The minimum loss ratio for such franchise insurance shall
be 60 percent.
(c)
Individual and franchise insurance issued to ages 65 and over.
The minimum loss ratio for issue ages 65 and over for all
such policies shall be 65 percent, unless one rate is charged for all ages
under 65 and 65 and over and the policy is issued at all ages 25 and over in
which case the applicable standard for policies issued to ages under 65
apply.
(d)
Individual
and franchise insurance no longer actively marketed.
The minimum expected future loss ratio with respect to the
increased portion of premium due to premium increases on individual and
franchise policies no longer actively marketed to the general public shall be
75 percent, unless necessary renewal expenses larger than 25 percent of premium
have been demonstrated.
(e)
Modifications to minimums upon recognition of dividends.
When dividends are recognized as benefits in the loss ratio
calculations of section
52.40(c) or (d)
of this Part, when they equal or exceed 15 percent of the premium in any year,
and if the minimum loss ratio would not be met without inclusion of the
dividends, the otherwise applicable minimum loss ratio shall be raised by five
percent (for example, 50 percent to 55 percent). Each additional 10 percent of
premium paid as dividends above 15 percent shall raise the minimum an
additional five percent.
(f)
Group and blanket insurance.
The minimum loss ratio for group and blanket insurance
shall be 65 percent, except that:
(1)
for insurance covering less than 50 persons at inception, excluding dependents,
the minimum loss ratio shall be 60 percent;
(2) for Medicare supplement insurance, the
minimum loss ratio shall be 75 percent as required by subdivision (i) of this
section; and
(3) for long term care
insurance, nursing home insurance only, home care insurance only and nursing
home and home care insurance the minimum loss ratio shall be 70
percent.
(g)
Special cases.
In certain cases where the superintendent has agreed that a
particular policy form is of special and unique value to the public,
considering such matters as availability and consumer demand, and where it has
been demonstrated that the product cannot reasonably meet the otherwise
applicable loss ratio standards, these standards may be modified or
waived.
(h) Long term care
insurance, nursing home insurance only, home care insurance only, and nursing
home and home care insurance. The minimum loss ratio for issue ages 65 and over
for all individual policies shall be 65 percent, and for issue ages 64 and
below for all such policies shall be 60 percent.
(i) A
Medicare supplement
policy form or
certificate form shall not be delivered or issued for delivery unless the
policy form or the
certificate form can be expected, as estimated for the
entire period for which the rates are computed to provide coverage, to return
to policyholders and certificateholders in the form of aggregate benefits (not
including anticipated refunds or credits) provided under the
policy form or
certificate form:
(1) at least 75 percent of
the aggregate amount of premiums earned in the case of group policies;
or
(2) at least 65 percent of the
aggregate amount of premiums earned in the case of individual policies,
calculated on the basis of incurred claims experience or incurred health care
expenses where coverage is provided by a health maintenance organization on a
service rather than reimbursement basis and earned premiums for such period in
accordance with accepted actuarial principles and practices.
(j)
Specified disease
coverage.
(1) The minimum loss ratio
for specified disease policies or certificates written on an indemnity and
recurring basis shall be:
(i) 60 percent in
the case of individual insurance issued under the age of 65;
(ii) 65 percent in the case of individual
insurance issued at ages 65 and over, except that if one rate is charged for
all ages under 65 and 65 and over, and the policy or certificate is issued at
all ages 25 and over, the applicable standard for a policy or certificate
issued to ages under 65 shall apply;
(iii) 65 percent in the case of franchise
insurance; and
(iv) 70 percent in
the case of group or blanket insurance.
(2) The minimum loss ratio for specified
disease policies or certificates written on an indemnity and non-recurring
basis shall be:
(i) 60 percent in the case of
individual insurance issued under the age of 65;
(ii) 65 percent in the case of individual
insurance issued at ages 65 and over, except that if one rate is charged for
all ages under 65 and 65 and over, and the policy or certificate is issued at
all ages 25 and over, the applicable standard for policies or certificate
issued to ages under 65 shall apply;
(iii) 65 percent in the case of franchise
insurance; and
(iv) 70 percent in
the case of group or blanket insurance.
(k)
Volunteer firefighter enhanced
cancer insurance.
The minimum loss ratio for volunteer firefighter enhanced
cancer insurance shall be 75 percent.
Footnotes
* Definitions of renewal
clause:
