(1) Policy
forms will be reviewed according to
211 CMR 42.00 as well as any
other relevant statute or regulation. This provision, 211 CMR 42.06, may not be
used to issue a policy that is defined in
211 CMR 42.00 or any other
statute or regulation and that does not otherwise meet the requirements set
forth therein.
(2) All rate filings
shall at least explain formulas used to derive rates, expected claim costs,
assumptions regarding mortality, morbidity and lapse rates, and the detailed
commission schedule and anticipated administrative expenses associated with the
policy. In order to substantiate rate revision filings, filings must maintain
experience for that policy form, may combine experience for different policy
forms where the coverage is substantially the same, and must demonstrate that
the carrier is using fund accounting for guaranteed renewable policies to
reflect premiums, investment income, losses, expenses, and provisions for
reserves specific to that policy form. Any rates filed, whether initial or
revised, will be disapproved unless the aggregate anticipated loss ratio for
the entire period for which rates are computed to provide coverage meets the
following standards:
(a) for purposes of 211
CMR 42.06(2)(b) and 42.06(2)(c) optionally renewable means renewal is at the
option of the insurance company; conditionally renewable means renewal can be
declined by the insurance company only for stated reasons other than
deterioration of health; guaranteed renewable means renewal cannot be declined
by the insurance company for any reason, but the insurance company can revise
rates on a class basis; and guaranteed rate means renewal cannot be declined
nor can rates be revised by the insurance company;
(b) for hospital and medical expense policies
(including indemnity policies) and for similar policies the minimum loss ratio
shall be:
1.60% for optionally renewable policies;
2.55% for conditionally renewable and guaranteed renewable
policies; and
3.50% for guaranteed rate policies.
(c) for loss of income policies, including
business buyout and business expense policies, the actuarial memorandum may be
limited to lifetime loss ratios as certified by an actuary and the minimum loss
ratio shall be :
1.60% for optionally renewable policies;
2.55% for conditionally renewable policies;
3.50% for guaranteed renewable policies; and
4.45% for guaranteed rate policies.
(d) for policies providing either
substantially full coverage for specified perils (e.g., auto,
common carrier) or short term non-renewable coverage (e.g.,
trip insurance) the minimum loss ratio is 45%;
(e) for policies providing coverage for
accidents only, the minimum loss ratio shall be 45%;
(f) for policies meeting the requirements of
both 211 CMR 42.06(2)(d) and 42.06(2)(e), the minimum loss ratio is
45%;
(g) for policies issued to and
actually held by persons ages 65 or older, the minimum loss ratio shall be
65%;
(h) for policies under 211 CMR
42.06(2)(b) or 42.06(2)(c), the minimum loss ratio shall be five percentage
points less than those given if the expected average annual premium for the
policy, including riders and endorsements, is less than $200; and
(i) for long- term care insurance policies,
whether the filling is for an initial or revised rate, the aggregate lifetime
loss ratio shall be no less than 60% for policies sold as standard individual
policies and no less than 80% for policies sold as group conversion policies;
provided, that "aggregate lifetime loss ratio" means the present value at the
form's inception of all expected future benefits under the form divided by the
present value at the form's inception of all future premiums to be received
under the form; and
(j) for
specified disease policies, whether the filing is for an initial or revised
rate, the minimum loss ratio shall be no less than 60% for individual policies;
any rate filing for a specified disease insurance policy shall state the
carrier's Expected Durational Loss Ratios that will be used in completing
future experience monitoring forms described in
211
CMR 146.102.
(k) if, for any policy which provides
benefits of substantial economic value to the insured, it can be demonstrated
that the minimum loss ratio standards given above cannot possibly be attained,
a lower loss ratio is allowable.
(3)
Time Provisions.
The following provisions shall apply to individual accident and health
insurance policies subject to M.G.L. c. 175, § 108.
(a) All rate filings are subject to review by
an actuary specified by the Commissioner whose costs will be paid by the
company submitting the filing.
(b)
If a filing has been disapproved and is resubmitted, the cover letter shall
note the disapproval and any changes made since the earlier filing, with an
explanation of why the new filing should be approved. Resubmission of
disapproved forms should, where possible, be made within 90 days of
disapproval.
(c) The filer shall
have the right to request a hearing within ten days of receiving a final
disapproval. Within 20 days of the receipt of the request, the Division shall
schedule a date for the hearing, which must occur within 30 days of the
scheduling. At least ten days written notice of the hearing shall be given to
all interested parties.
(d) The
hearing officer may order a pre-hearing conference for the resolution or
simplification of issues, to be held no less than three days prior to the
scheduled date of a hearing.
(e)
For a time period of ten days or less only, business days shall be counted. For
time periods greater than ten days, calendar days must be used.
(4)
Rate
Manual. Every carrier must maintain on file with the Division an
up-to-date rate manual for all individual accident and health policies, riders,
and endorsements currently available for sale in Massachusetts. The manual must
include:
(a) name of the carrier on each
page;
(b) table of contents or
index; and
(c) identification by
form number of each policy or endorsement to which the rates apply.
