Utah Admin. Code R590-146-14 - Loss Ratio Standards and Filing Requirements

(1)

(a)

(i) A policy or certificate may not be delivered or issued for delivery unless the policy form or certificate form can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return to policyholders and certificate holders in the form of aggregate benefits, not including anticipated refunds or credits, provided under the policy form or certificate form:

(A) at least 75% of the aggregate amount of premiums earned, in the case of group policies; or

(B) at least 65% of the aggregate amount of premiums earned, in the case of individual policies.

(ii) The loss ratio shall be calculated based on incurred claims experience or incurred health care expenses when coverage is provided by a health maintenance organization on a service, rather than reimbursement, basis and earned premiums for the period and in accordance with accepted actuarial principles and practices. Incurred health care expenses when coverage is provided by a health maintenance organization may not include:

(A) home office and overhead costs;

(B) advertising costs;

(C) commissions and other acquisition costs;

(D) taxes;

(E) capital costs;

(F) administration costs; and

(G) claims processing costs.

(b) Rate filings and rating schedules shall demonstrate that expected claims in relation to premiums comply with the requirements of this section when combined with actual experience to date. Rate revision filings shall also demonstrate that the anticipated loss ratio over the entire future period for which the revised rates are computed to provide coverage can be expected to meet the appropriate loss ratio standards, and comply with the requirements of Rule R590-85.

(c) For purposes of this subsection, policies issued through the mail or by mass media advertising, including both print and broadcast advertising, are considered to be individual policies.

(d) For policies issued before July 30, 1992, expected claims in relation to premiums shall meet:

(i) the originally filed anticipated loss ratio when combined with the actual experience since inception;

(ii) the appropriate loss ratio requirement from Subsection (1)(a)(i) when combined with actual experience beginning with the effective date of October 31, 1994; and

(iii) the appropriate loss ratio requirement from Subsection (1)(a)(i) over the entire future period for which the rates are computed to provide coverage.

(2)

(a) An issuer shall collect, complete, and file with the commissioner by May 31 of each year:

(i) the Medicare Supplement Refund Calculation report;

(ii) the Calculation of Benchmark Ratio Since Inception for Group Policies report; and

(iii) the Calculation of Benchmark Ratio Since Inception for Individual Policies report.

(b) If, based on 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 on a statewide basis for each standardized plan type in a standardized plan. For purposes of the refund or credit calculation, experience on policies issued within the reporting year shall be excluded.

(c) For this section and for policies or certificates issued before July 30, 1992, the issuer shall make the refund or credit calculation separately for all individual policies, including all group policies subject to an individual loss ratio standard when issued, combined, and all other group policies combined for experience after the effective date of this rule.

(d) A refund or credit shall be made when the benchmark loss ratio exceeds the adjusted experience loss ratio and the amount to be refunded or credited exceeds a de minimis level. The 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, 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 30 following the experience year upon which the refund or credit is based.

(3)

(a) An issuer shall annually file a report with the commissioner that includes the rates, rating schedule, and supporting documentation, including ratios of incurred losses to earned premiums by policy duration in accordance with the filing requirements and procedures prescribed by the commissioner.

(b) The supporting documentation shall demonstrate, in accordance with actuarial standards of practice using reasonable assumptions, that the appropriate loss ratio standards can be expected to be met over the entire period for which rates are computed. The demonstration shall exclude active life reserves. An expected third-year loss ratio, which is greater than or equal to the applicable percentage, shall be demonstrated for policies or certificates in force less than three years.

(c) The report shall be filed no later than May 31 each year, and in compliance with Rule R590-220.

(4)

(a) An issuer shall file with the commissioner, in accordance with the applicable filing procedures, appropriate premium adjustments necessary to produce loss ratios as anticipated for the current premium for the applicable policies or certificates. The supporting documents necessary to justify the adjustment shall accompany the filing. The filing:

(i) shall include premium adjustments necessary to produce an expected loss ratio under the policy or certificate to conform to minimum loss ratio standards and are expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premiums by the issuer for the policies or certificates; and

(ii) may not include a premium adjustment that:

(A) modifies the loss ratio experience under the policy other than the adjustments described in this subsection; and

(B) is made at any time other than the renewal date or anniversary date.

(b) If an issuer fails to make premium adjustments acceptable to the commissioner, the commissioner may order premium adjustments, refunds, or premium credits deemed necessary to achieve the loss ratio required by this section.

(5)

(a) An issuer shall annually file by May 31 the Utah rate and enrollment information for standardized Medicare supplement insurance plans as specified in the Medicare Supplement Rate Data Template spreadsheet, available on the department's website, https://insurance.utah.gov

(b) The report shall be filed at https://medigap.utah.gov/provider/upload no later than May 31 each year and in compliance with Rule R590-220.

(6) The commissioner may conduct a public hearing to gather information concerning a request by an issuer for an increase in a rate if the experience of the policy form for the previous reporting period is not in compliance with the applicable loss ratio standard. The determination of compliance is made without consideration of any refund or credit for the reporting period. Public notice of the hearing shall be furnished in a manner prescribed by the commissioner.

Notes

Utah Admin. Code R590-146-14

Amended by Utah State Bulletin Number 2019-13, effective 6/7/2019 Adopted by Utah State Bulletin Number 2024-16, effective 8/7/2024