Utah Admin. Code R590-85-5 - Reasonableness of Benefits in Relation to Premium
(1) With respect to a new form under which
the average annual premium per policy is expected to be at least $200, the
anticipated loss ratio shall be at least as great as shown in this subsection:
(a) Accident and Health Insurance Coverage.
Except as provided in Subsections (1)(d) and (1)(e), the minimum loss ratio
for:
(i) a non-renewable form is 65%;
(ii) an optionally renewable form
is 60%;
(iii) a conditionally
renewable form is 55%;
(iv) a
guaranteed renewable form is 55%; and
(v) a non-cancelable form is 50%.
(b) Income Replacement Insurance
Coverage. The minimum loss ratio for:
(i) a
non-renewable form is 65%;
(ii) an
optionally renewable form is 60%;
(iii) a conditionally renewable form is
55%;
(iv) a guaranteed renewable
form is 50%; and
(v) a
non-cancelable form is 45%.
(c) For a policy form, including
endorsements, under which the expected average annual premium per policy is:
(i) $100 or more but less than $200, subtract
five percentage points; or
(ii)
less than $100 subtract 10 percentage points.
(d) For a Medicare supplement policy,
benefits shall be considered reasonable in relation to premiums if the
anticipated loss ratio meets the requirements of Section
R590-146-14.
(e) The minimum loss ratio for a short-term
limited duration health insurance form is 70%.
(2) Rate Changes. With respect to the filing
of a rate change for a previously filed form, the standards of this subsection
shall be met.
(a) Subsections (2)(a)(i) and
(2)(a)(ii) shall be at least as great as the standards in Subsection (1) and
shall include interest in the calculation of benefits, premiums, and present
values:
(i) the anticipated loss ratio over
the entire period for which the changed rates are computed to provide coverage;
and
(ii) the ratio of Subsections
(2)(a)(ii)(A) and (2)(a)(ii)(B); where:
(A) is
the sum of the accumulated benefits, from the original effective date of the
form to the effective date of the change, and the present value of future
benefits; and
(B) is the sum of the
accumulated premiums from the original effective date of the form to the
effective date of the change and the present value of future premiums, the
present values to be taken over the entire period for which the changed rates
are computed to provide coverage, and the accumulated benefits and premiums to
include an explicit estimate of the actual benefits and premiums from the last
date an accounting was made to the effective date of the change.
(b) If an insurer wishes
to charge a premium for policies issued on or after the effective date of the
change, which is different from the premium charged for the policies issued
prior to the change date, then:
(i) with
respect to policies issued prior to the effective date of the change, the
requirements of Subsection (2)(a) must be satisfied; and
(ii) with respect to policies issued on and
after the effective date of the change, the standards are the same as in
Subsection (1), except that the average annual premium shall be determined
based on an actual rather than an anticipated distribution of
business.
(c) A company
must review its experience periodically and file rate changes, as appropriate,
in a timely manner to avoid the filing of exceptionally large rate
increases.
(d) A rate filing
requesting an increase may be prohibited if a company has failed to file rate
changes in a timely manner.
Notes
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