Iowa Admin. Code r. 191-36.10
Current through Register Vol. 47, No. 8, October 30, 2024
Rule 191-36.10 - Loss ratios(1)Average annual premium.a. New forms. With respect to a new form under which the average annual premium (as defined below) is expected to be at least $200 benefits shall be deemed reasonable in relation to premiums provided the anticipated loss ratio is at least as great as shown in the following table: | Type of | Renewal Clause | |
| Coverage | OR | CR | GR | NC | |
| Medical Expense | 60% | 55% | 55% | 50% | |
| Loss of Income and other | 60% | 55% | 50% | 45% | |
For a policy form, including riders and endorsements, under which the expected average annual premium per policy is $100 or more but less than $200, subtract five percentage points from the numbers in the table above, or if less than $100, subtract ten percentage points.
b. The average annual premium per policy shall be computed by the insurer based on an anticipated distribution of business by all applicable criteria having a price difference, such as age, sex, amount, dependent status, rider frequency, etc., except assuming an annual mode for all policies (i.e., the fractional premium loading shall not affect the average annual premium or anticipated loss ratio calculation). The above anticipated loss ratio standards do not apply to a class of business where such standards are in conflict with specific statutes or regulations.
c. Definitions of renewal clause. OR-Optionally Renewable: Renewal is at the option of the insurance company.
CR-Conditionally Renewable: Renewal can be declined by the insurance company only for stated reasons other than deterioration of health.
GR-Guaranteed Renewable: Renewal cannot be declined by the insurance company for any reason, but the insurance company can revise rates on a class basis.
NC-Non-Cancelable: Renewal cannot be declined nor can rates be revised by the insurance company.
(2)Rate revisions. With respect to filings of rate revisions for a previously approved form, benefits shall be deemed reasonable in relation to premiums provided the following standards are met.a. With respect to forms issued on and after the effective date of the revision, the standards are the same as in 36.10(1) above, except that the average annual premium shall be determined based on an actual rather than an anticipated distribution of business.b. With respect to forms issued prior to the effective date of the revision, both (1) and (2) as follows shall be at least as great as the standards in 36.10(1): (1) The anticipated loss ratio over the entire period for which the revised rates are computed to provide coverage;(2) The ratio of (i) and (ii); where(i) Is the sum of the accumulated benefits, from the later of the original effective date of the form or the effective date of this chapter, to the effective date of the revision, and the present value of future benefits, and(ii) Is the sum of the accumulated premiums from the later of the original effective date of the form or the effective date of this chapter, to the effective date of the revision and the present value of future premiums, such present values to be taken over the entire period for which the revised rates are computed to provide coverage, and such accumulated benefits and premiums to include an explicit estimate of the actual benefits and premiums from the last date as of which an accounting has been made to the effective date of the revision. Interest shall be used in the calculation of these accumulated benefits and premiums and present values only if it is a significant factor in the calculation of this loss ratio.(3)Credibility factors. Anticipated loss ratios different than those indicated in 36.10(1) and 36.10(2) will require justification based on the special circumstances that may be applicable.a. Examples of coverages requiring special consideration are as follows: (2) Short term nonrenewable, e.g., airline trip, student accident;(3) Specified peril, e.g., cancer, common carrier;b. Examples of other factors requiring special consideration are as follows: (1) Marketing methods, giving due consideration to acquisition and administration costs and to premium mode;(2) Extraordinary expenses;(3) High risk of claim fluctuation because of the low loss frequency or the catastrophic or experimental nature of the coverage;(4) Product features such as long elimination periods, high deductibles and high maximum limits;(5) The industrial or debit method of distribution;(6) Forms issued prior to the effective date of these guidelines. Companies are urged to review their experience periodically and to file rate revisions, as appropriate, in a timely manner to avoid the necessity of later filing of exceptionally large rate increases.
(4)Medicare supplement policies. Rescinded lAB 10/30/91, effective 12/4/91. Iowa Admin. Code r. 191-36.10