Code of Massachusetts Regulations › 211 CMR - DIVISION OF INSURANCE › Title 211 CMR 146.00 - Specified Disease Insurance › Section 146.12 - Experience Monitoring Calculation

Current through Register 1525, July 5, 2024
(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.