New Jersey Administrative Code
Title 11 - INSURANCE
Chapter 4 - ACTUARIAL SERVICES
Subchapter 53 - MINIMUM STANDARDS FOR SPECIFIED DISEASE AND CRITICAL ILLNESS COVERAGES
Section 11:4-53.6 - Loss ratio standards

Universal Citation: NJ Admin Code 11:4-53.6

Current through Register Vol. 56, No. 18, September 16, 2024

(a) In order to assure that benefits are reasonable in relation to the premium charged, the minimum loss ratio for specified disease and critical illness policies shall be as follows:

1. For policies issued to groups other than associations, at least 75 percent;

2. For individual policies, at least 60 percent; and

3. For group policies issued to associations, at least 65 percent.

(b) With respect to filings of rate revisions for previously approved policy forms, benefits shall be deemed reasonable in relation to premiums if both the anticipated loss ratio and the aggregate loss ratio satisfy these loss ratio standards.

(c) Carriers shall include with the initial submission of rates for a new policy an actuarial memorandum which shall include the following:

1. The anticipated loss ratio;

2. The specific formulas and methodology used in calculating gross premiums;

3. An explanation and documentation supporting the premium assumptions;

4. The objective basis for rate differentials; and

5. A certification signed by the carrier's actuary that the information contained in the actuarial memorandum is appropriate and that the benefits provided are reasonable in relation to the premiums charged.

(d) The actuarial memorandum submitted to the Department pursuant to (c) above shall be confidential and shall not be considered a public record or disclosed by the Department to any person.

(e) Carriers shall submit for filing with the Commissioner annually on or before June 30 one report for each policy form for which policies issued in New Jersey remain in force in accordance with the applicable reporting form set forth as Exhibit B in the Appendix to this subchapter, incorporated herein by reference.

(f) If the loss ratio for a policy, based on a substantial volume of reasonably mature business, does not meet the standards set forth in (a) above, the carrier shall be required to explain why the premium should not be regarded as unreasonably high in relation to the benefits provided. After consideration of the explanation and any additional information furnished by the carrier, the Department shall inform the carrier if the benefits provided are considered unreasonable in relation to the premium charged. If within 90 days thereafter the carrier does not reduce the premium or increase the benefits provided in the policy such that the standards set forth in (a) above are met, the Department may take action and/or impose penalties as may be appropriate pursuant to law. Such action may include the Department's requiring that an independent audit of the carrier's loss ratio be conducted at the carrier's expense.

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