Wash. Admin. Code § 284-60-040 - Grouping of policy forms for purposes of rate making and requests for rate increase
(1) The actuary
responsible for setting premium rates shall group similar policy forms,
including forms no longer being marketed, in the pricing calculations. Such
grouping shall rely on the judgment of the pricing actuary and be satisfactory
to the commissioner. Among the factors which shall be considered are similar
claims experience, types of benefits, reserves , margins for contingencies,
expenses and profit, and equity between policyholders. Such grouping shall
enhance statistical reliability and improve the likelihood of premium adequacy
without introducing elements of discrimination in violation of
RCW
48.18.480.
(2) The insureds under similar policy forms
are grouped at the time of rate making in accord with
RCW
48.18.480 because they are expected to have
substantially like insuring, risk and exposure factors and expense elements.
The morbidity and mortality experience of these insureds will, as a group,
deteriorate over time. It is hereby defined to be an unfair and discriminatory
practice, pursuant to
RCW
48.01.030,
48.18.480 and
48.30.010, to withdraw a form from
its assigned grouping by reason only of the deteriorating health of the people
insured thereunder.
(3) One or more
of the policy forms grouped for rate making purposes may, by random chance,
experience significantly higher or more frequent claims than the other forms.
It is hereby defined to be an unfair and discriminatory practice, pursuant to
RCW
48.01.030,
48.18.480 and
48.30.010, to deviate from the
assigned grouping of policy forms for pricing purposes at the time of
requesting a rate increase unless the actuary can justify to the satisfaction
of the commissioner that a different grouping is more equitable because of some
previously unrecognized and nonrandom distinction between forms or between
groups of insureds.
(4) Successive
policy forms of similar benefits are sometimes introduced by the insurers for
the purpose of keeping up with trends in hospital costs, new developments in
medical practice, additional supplemental benefits offered by competitors, and
other reasons. While this is commendable, policyholders who can not qualify for
the new improved policies, or to whom the new benefits are not offered, are
left insured and isolated as a high risk group under the prior form and soon
become subject to massive rate increases. It is hereby defined to be an unfair
and discriminatory practice, pursuant to
RCW
48.01.030,
48.18.480 and
48.30.010, to fail to combine
successive generic policy forms and to fail to combine policy forms of similar
benefits covering generations of policyholders in the calculation of premium
rates and loss ratios.
Notes
Statutory Authority: RCW 48.02.060. 83-14-002 (Order R 83-1), § 284-60-040, filed 6/23/83, effective 9/1/83.
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