Code of Maine Rules › 02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION › 031 - BUREAU OF INSURANCE › Chapter 940 - REQUIREMENTS FOR HEALTH INSURANCE RATE FILINGS AND DATA REPORTING › Section 031-940-7 - Individual Rate Filings Subject to Pure Loss Ratio Standards

Current through 2024-29, July 17, 2024
A.
Applicability
: This section
				applies to all individual policies except (a) rate filings for individual
				health plans subject to the ACA rating requirements and (b) rate filings for
				which the carrier has elected the guaranteed loss ratio option pursuant to
				Subsection 8(H) and rate review is not required pursuant to the ACA. For
				purposes of this section, the group policies specified in Paragraphs 6(A)(3)
				and (4) are treated as individual policies.
B.
Minimum pure loss ratios for
				individual policies
1. This subsection
				does not apply to rates for individual policies issued on or after December 1,
				1993 and subject to Title 24-A M.R.S.A. §2736-C.
2.
Definitions
:For the purposes
				of this subsection, the following definitions apply:
a.
Average Annual Premium Per Policy,
				$X
:The average annual premium per individual policy or group certificate
				shall include all charges for riders and endorsements and shall be estimated by
				the carrier based on an anticipated distribution of business by all significant
				criteria having a price difference, such as age, sex, amount, dependent status,
				rider frequency, etc., but assuming an annual mode for all policies (i.e., the
				fractional premium loading shall not affect the average annual premium or
				anticipated pure loss ratio calculation).
The value of X shall be determined for each calendar year of
				  issue. It is calculated based on the pricing assumptions applicable to that
				  calendar year of issue.
b.
Consumer Price Index Factor, I
:The factor, I, is used to adjust
				the test for low and high average premiums to account for inflation. It is
				indexed to a value of 1.00 for 2010 and is defined as:
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where:
(i) (N-1) is
				the calendar year immediately preceding the calendar year (N) in which the rate
				filing is submitted in the state;
(ii) CPI-U is the consumer price index for
				all urban consumers, for all items, and for all regions of the U.S. combined,
				with 1982-84=100, as determined by the U.S. Department of Labor, Bureau of
				Labor Statistics; and
(iii) The
				CPI-U for any year (N-1) is taken as the value for September. For 2009, this
				value was 215.969, setting the value of I equal to 1 for 2010.
c.
Renewal Clauses
OR -
Optionally Renewable
: Renewal is at the
				  option of the insurance company.
CR -
Conditionally Renewable
:Renewal can be
				  declined by class, by geographic area or for stated reasons other than
				  deterioration of health.
GR -
Guaranteed Renewable
:Renewal cannot be
				  declined by the insurance company for any reason, at least until the age of 65
				  or until eligibility for Medicare, but the insurance company can revise rates
				  on a class basis.
NC -
Non-Cancelable
:Renewal cannot be declined,
				  at least until the age of 65 or until eligibility for Medicare, nor can rates
				  be revised by the insurance company.
NR-
Nonrenewable
: This includes short-term
				  nonrenewable policies with a maximum duration of one year and no contractual
				  renewal provision.
3. With respect to a form under which the
				average annual premium, $X, is expected to be at least as large as I ×
				$550 but not more than I × $3,300, the filing must demonstrate that the
				anticipated
pure loss ratio
is at least as great as shown in
				the following table:
Type of Coverage
Renewal Clause
OR
CR
GR
NR
NC
Medical Expense
60%
55%
55%
50%
50%
Loss of Income and Other
60%
55%
50%
45%
45%
4.
Low Average Premium Forms
: For a policy form under which the
				expected average annual premium, $X, is less than I ×$550, the
				appropriate ratio from the table in paragraph 1 may be adjusted downward by the
				following formula:
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where: R is the table ratio;
R' is the resulting guideline ratio;
I is the consumer price index factor as defined in
				  §7(B)(2)(b) above; and
X is the average annual premium defined in §7(B)(2)(a)
				  above up to a maximum of I ×$550.
In no event, however, shall R' be less than
				  45%.
5. High Average Premium
				Forms: For a policy form under which the expected average annual premium, $X,
				is greater than I × $3,300, the appropriate ratio from the table above
				must be adjusted upward by the following formula:
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where: R is the table ratio
R' is the resulting guideline ratio
I is the consumer price index factor as defined in
				  §7(B)(2)(b) above
X is an average annual premium as defined in §7(B)(2)(a)
				  above exceeding I×$3,300
In no event, however, shall R' exceed
				  65%.