N.H. Admin. Code § Ins 4106.04

Current through Register No. 50, December 12, 2024

Section Ins 4106.04 - Submission Requirements

(a) All submissions shall include an actuarial memorandum, as follows:

(1) For new policy forms, the actuarial memorandum shall include:

a. A brief description of:

1. The type of policy;

2. Benefits;

3. Renewability;

4. General marketing method;

5. Issue age limits; and

6. Rate determination, including all assumptions;

b. Expense assumptions developed on a unit basis, including:

1. Percent of premium;

2. Dollars per policy;

3. Dollars per unit of benefit; or

4. Any combination of the above.

c. Estimated average annual premium per policy;

d. Anticipated loss ratio, including a brief description of how it was calculated, and anticipated durational loss ratio assumptions;

e. Anticipated trend information by cost, utilization, technology and other components;

f. Anticipated loss ratio presumed reasonable according to this part;

g. Actuarial certification; and

h. Rate sheet; and

(2) For rate revision requests, the actuarial memorandum shall include:

a. A brief description of the:

1. Type of policy;

2. Benefits;

3. Renewability;

4. General marketing method; and

5. Issue age limits;

b. A statement indicating whether the policy forms are:

1. An open block that is still available to new issues; or

2. A closed block that is no longer being sold;

c. Scope and reason for the rate revision including a statement indicating whether the revision applies only to:

1. New business;

2. In-force business; or

3. Both new and in-force business;

d. An outline of all past increases that have been approved and implemented on the form;

e. The estimated average annual premium per policy calculated both before and after the rate increase;

f. A description of the relationship of the proposed rate scale to the current rate scale;

g. Past experience as specified in paragraph (b);

h. A brief description as to how revised rates were determined, including a general description of and a source for each assumption used;

i. Expense assumptions developed on a unit basis including:

1. Percent of premium;

2. Dollars per policy;

3. Dollars per unit of benefit; or

4. Any combination of the above;

j. The anticipated future loss ratio, and a description as to how it was calculated;

k. The anticipated loss ratio that combines past and future experience, and a description as to how it was calculated;

l. Anticipated trend information by cost, utilization, technology and other components;

m. The anticipated loss ratio presumed reasonable according to this part;

n. Actuarial certification;

o. Current rate sheet for previously approved rates; and

p. New rate sheet for proposed rates.

(b) Carriers shall maintain records of earned premiums, incurred claims and reserves for each calendar year and for each policy form, including data for rider and endorsement forms that are used with the policy form, however, the carrier:

(1) May maintain separate data for each rider or endorsement form;

(2) May submit a request to the department to combine experience for the purposes of evaluating the data for rider and endorsement forms in relation to premium rates and rate revisions if the rider and endorsement forms provide similar coverage and provisions, are issued to similar risk classes, and are issued under similar underwriting standards, subject to the following:

a. Once a carrier combines experience pursuant to this paragraph, the carrier shall not again separate the experience;

b. The carrier shall provide experience data for all issue years for all of the rider and endorsement policy forms that have been combined for this purpose; and

(3) Shall provide the ratios of actual claims to the claims expected according to the assumptions underlying the existing rates.

(c) In determining the credibility and appropriateness of experience data, due consideration shall be given to the following relevant factors:

(1) Statistical credibility of premiums and benefits, including:

a. Low exposure; and

b. Low loss frequency;

(2) Experience and projected trends relative to the kind of coverage, including:

a. Inflation in medical expenses; and

b. Economic cycles affecting disability income experience;

(3) The concentration of experience at early policy durations where select morbidity and preliminary term reserves are applicable and where loss ratios are expected to be substantially lower than at later policy durations; and

(4) The mix of business by risk classification.

(d) Due consideration shall be given to the effect of making the following adjustments on the anticipated loss ratio:

(1) Substitution of actual claim run-offs for claim reserves and liabilities;

(2) Determination of loss ratios with the increase in policy reserves subtracted from premiums rather than added to benefits;

(3) Accumulation of experience fund balances;

(4) Substitution of net level policy reserves for preliminary term policy reserves;

(5) Adjustment of premiums to an annual mode basis; and

(6) Other adjustments or schedules suited to the form and to the records of the company.

(e) The data used to make adjustments as required in (d) shall be reconciled to the data required to calculate the anticipated loss ratio as prescribed.

(f) Rate variations for different benefit plans shall not exceed the maximum possible difference in benefits unless the carrier demonstrates that the rate variation is based on expected utilization differences attributable to the plan designs, independent of the anticipated variation in health status or other demographics of the populations electing the varying plans.

(g) If a carrier provides a quote to a policyholder or prospective policyholder, where an alternative design exists with premium savings that are greater than the anticipated out of pocket expenses, the carrier shall disclose the availability of this policy alternative. Deductibles, co-insurance and elimination periods are examples of benefit designs that should be considered in calculating this difference. Variations in co-pays shall not be considered due to uncertainty with regard to utilization.

(h) Pursuant to (g) above, this policy alternative shall be made available on a guaranteed issue basis for renewal quotes.

N.H. Admin. Code § Ins 4106.04

#9690, eff 4-9-10; ss by #9938, eff 6-10-11

The amended version of this section by New Hampshire Register Volume 39, Number 24, eff.6/10/2019 is not yet available.