Section 146.12 - Experience Monitoring Calculation(1) Each carrier shall collect and file with the Commissioner by June 30 of each year, addressed to the Director of the State Rating Bureau, the following experience data contained in the form prescribed by the Commissioner in 211 CMR 146.102: Appendix A for each calendar year since inception, for all years accumulated at the interest assumptions used in the applicable expected durational loss ratio: Earned Premium, Incurred Claims, Actual Durational Loss Ratio and Expected Durational Loss Ratio. The calculation shall include Massachusetts experience when credible and national experience when Massachusetts experience is not credible. The carrier shall clearly specify in any calculations whether the experience reported is nationwide or for Massachusetts only.(2) If on the basis of the experience data as reported, the carrier's Expected Durational Loss Ratio exceeds its Actual Durational Loss Ratio, then the carrier shall compare the ratio of it s Actual Durational Loss Ratio to its Expected Durational Loss Ratio using the following chart in order to determine whether a corrective action is required: | Number of Reported Claims in the Period | Ratio Indicating that Insurer Action is Necessary |
| 1,000 or more | 0.90 or less |
| 100 999 | 0.80 or less |
| 25 99 | 0.65 or less |
| 0 - 24 | 0 or less |
(3) If corrective action is required according to the foregoing chart, a carrier shall comply with the following: (a) A preliminary plan outlining the policy forms which require carrier corrective action shall be made with the June 30 filing. If, in the opinion of the carrier's actuary, the ratio indicating that insurer action is necessary is due to unusual reserve fluctuations, economic conditions, or other nonrecurring conditions, the preliminary plan should include that opinion, with appropriate justification. In such a case, the Commissioner may exempt the policy form from the need for a corrective action plan for that year. Filing of the final corrective action plan itself shall be made by the later of October 1 or three months from the date of denial of the exemption, and must contain the information required under 211 CMR 42.06(2).(b) For policies that are not noncancelable, a corrective action plan shall demonstrate the plan proposing to reduce premiums, apply dividends, increase benefits, or use any combination of these or other methods to make corrections so that the carrier's specified disease product can achieve, as certified by an actuarial fellow as satisfying sound and reasonable actuarial principles, the loss ratio level that was part of the original policy filing with the State Rating Bureau and that satisfied the requirements of 211 CMR 42.06. Any such plan is subject to approval by the Commissioner and any plan to increase benefits may not be included as part of the insurer's plan without offering the alternative option of appropriate premium reductions. Failure to submit such a plan within the required time period will be a violation of 211 CMR 146.00 and will subject the insurer to the penalties of M.G.L. c. 175, § 189.(c) For policies that are noncancelable, a corrective action plan shall demonstrate the continued reasonableness of the benefits in relation to premiums, as certified by an actuarial fellow as satisfying sound and reasonable actuarial principles, justifying continued use of the policy form or shall demonstrate any correction actions to reduce premiums, apply dividends, increase benefits, or use any combination of these or other methods to make corrections so that the carrier's specified disease product can achieve, as certified by an actuarial fellow as satisfying sound and reasonable actuarial principles, the loss ratio level that was part of the original policy filing with the State Rating Bureau to satisfy the requirements of 211 CMR 42.06. Any such plan is subject to approval by the Commissioner and any plan to increase benefits may not be included as part of the insurer's plan without offering the alternative option of appropriate premium reductions. Failure to submit such a plan within the required time period will be a violation of 211 CMR 146.000 and will subject the insurer to the penalties of M.G.L. c. 175, § 189.