Florida Administrative Code › 69 - DEPARTMENT OF FINANCIAL SERVICES › 69O - OIR - Insurance Regulation › Chapter 69O-149 - FILING OF FORMS AND RATES FOR LIFE/HEALTH INSURANCE › Section 69O-149.008 - Loss Ratio Guarantee Filings

Current through Reg. 50, No. 138; July 16, 2024
(1)
				Applicability. This rule is applicable to individual accident and health
				insurance policy forms whose original new product filing is submitted for
				approval on or after October 1, 1991 and to rate revisions for policy forms
				submitted for approval before October 1, 1991. Insurers are not required to
				make filings pursuant to the provisions of Section
				627.410(8),
				F.S. However, insurers may elect to exercise the loss ratio guarantee option in
				Section 627.410(8),
				F.S., in lieu of making filings pursuant to Sections
				627.410(6) and
				(7), F.S. If an insurer elects the loss ratio
				guarantee option, then the provisions of Section
				627.410(8),
				F.S., and this rule are mandatory. Medicare Supplement policies, as defined by
				Section 627.672, F.S.; long-term care
				policies, as defined by section
				627.9404, F.S.; and other policy
				forms under which more than 50% of the policies are issued to individuals age
				65 or over, are not eligible to be filed pursuant to the loss ratio guarantee
				provisions of Section
				627.410(8),
				F.S.
(2) Initial Filing Exercising
				the Loss Ratio Guarantee Option. In order for an insurer to exercise the rate
				filing option in Section
				627.410(8),
				F.S., the initial loss ratio guarantee filing for new products and for rate
				revisions to already-approved forms shall be made in compliance with Rules
				69O-149.001 through 69O-149.006, F.A.C., and shall
				be accompanied by a specific written statement regarding the details of the
				loss ratio guarantee, documenting the durational and lifetime loss ratios. The
				terms of the guarantee, and the durational and lifetime loss ratios, are
				subject to Office approval. The guarantee shall be signed by an officer of the
				insurer.
(3) Rate Renewals Pursuant
				to a Currently Approved Loss Ratio Guarantee. The rates shall be considered
				approved upon receipt by the Office of a filing which contains the rates and
				any modification factors, if applicable, and is accompanied by the most current
				approved loss ratio guarantee. This guarantee shall:
(a) Be in writing;
(b) Be signed by an officer of the
				insurer;
(c) Contain a presentation
				of the anticipated lifetime and durational target loss ratios contained in the
				actuarial memorandum in the filing when it was originally approved. If
				statutory changes render any portion of the original actuarial memorandum
				obsolete, an amended memorandum shall be filed to reflect those changes and
				shall contain revised durational and lifetime target loss ratios, which are
				subject to approval by the Office;
(d) Contain a guarantee that the applicable
				loss ratios for the experience period in which the revised rates will take
				effect, and for each one year experience period thereafter until further
				revised rates are filed, will meet the applicable durational and lifetime
				target loss ratios;
(e) Contain a
				certification, signed by an actuary, that the currently expected lifetime loss
				ratio is not more than 5% less than the filed lifetime loss ratio. The
				certification shall contain the currently expected lifetime loss ratio and its
				justification;
(f) Contain a
				guarantee that the applicable loss ratio results for the experience period
				shall be audited at the insurer's expense by an independent auditor. An
				independent auditor shall be an actuary or an accountant who is without bias
				with respect to the insurer and who is free from any obligation to or interest
				in the insurer, its management, or its owners. The independent auditor shall
				not have any relationships with the insurer or any conflict of interest which
				would impair integrity or objectivity or give the impression of impairing
				integrity or objectivity. The audit shall be performed in the second calendar
				quarter of the year following the end of the experience period and the results
				of the audit shall be reported to the Office no later than the end of that
				quarter. The audit shall be performed in accordance with generally accepted
				actuarial and accounting principles and shall conform to the actuarial
				demonstration requirements set forth in Rule
				69O-149.006, F.A.C.;
(g) Contain a guarantee that a refund will be
				made to policyholders, of the amount necessary to bring the applicable
				experience period loss ratio up to the durational target loss ratios referred
				to in paragraph (3)(c), above. Any such refund shall:
1. Be proportional, based on earned premium
				during the experience period;
2. Be
				made to all policyholders in this state who are insured under the applicable
				policy form as of the last day of the experience period;
3. Not be required for an individual if that
				refund would be less than $10. Refunds of less than $10 shall be aggregated and
				paid proportionally to the policyholders receiving refunds;
4. Include interest compounded monthly at the
				then current variable loan interest rate for life insurance policies
				established by the National Association of Insurance Commissioners, from the
				end of the experience period until the date of payment;
5. Be paid during the third calendar quarter
				of the year following the experience period. However, no refund shall be made
				until 60 days after the filing of the audit report required by paragraph
				(3)(f), above; and,
6. Be
				calculated so that the refund is subtracted from earned premiums in the loss
				ratio calculation. The premium refund shall not be considered a benefit
				payment; and,
(h) Contain
				a guarantee that if the applicable loss ratio exceeds the durational target
				loss ratio for that experience period by more than 20% of the durational target
				loss ratio, the insurer shall withdraw the policy form for purposes of issuing
				new policies, if so directed by the Office. This guarantee will apply only when
				there are at least 2,000 policyholders nationwide or 2,000 accumulated
				policyholder years.