Code of Massachusetts Regulations › 211 CMR - DIVISION OF INSURANCE › Title 211 CMR 42.00 - The Form And Contents Of Individual Accident And Sickness Insurance › Section 42.06 - Review of Policy Forms and Rate Filings

Current through Register 1525, July 5, 2024
(1) Policy
			 forms will be reviewed according to
			 211 CMR 42.00 as well as any
			 other relevant statute or regulation. This provision, 211 CMR 42.06, may not be
			 used to issue a policy that is defined in
			 211 CMR 42.00 or any other
			 statute or regulation and that does not otherwise meet the requirements set
			 forth therein.
(2) All rate filings
			 shall at least explain formulas used to derive rates, expected claim costs,
			 assumptions regarding mortality, morbidity and lapse rates, and the detailed
			 commission schedule and anticipated administrative expenses associated with the
			 policy. In order to substantiate rate revision filings, filings must maintain
			 experience for that policy form, may combine experience for different policy
			 forms where the coverage is substantially the same, and must demonstrate that
			 the carrier is using fund accounting for guaranteed renewable policies to
			 reflect premiums, investment income, losses, expenses, and provisions for
			 reserves specific to that policy form. Any rates filed, whether initial or
			 revised, will be disapproved unless the aggregate anticipated loss ratio for
			 the entire period for which rates are computed to provide coverage meets the
			 following standards:
(a) for purposes of 211
			 CMR 42.06(2)(b) and 42.06(2)(c) optionally renewable means renewal is at the
			 option of the insurance company; conditionally renewable means renewal can be
			 declined by the insurance company only for stated reasons other than
			 deterioration of health; guaranteed renewable means renewal cannot be declined
			 by the insurance company for any reason, but the insurance company can revise
			 rates on a class basis; and guaranteed rate means renewal cannot be declined
			 nor can rates be revised by the insurance company;
(b) for hospital and medical expense policies
			 (including indemnity policies) and for similar policies the minimum loss ratio
			 shall be:
1.60% for optionally renewable policies;
2.55% for conditionally renewable and guaranteed renewable
				policies; and
3.50% for guaranteed rate policies.
(c) for loss of income policies, including
			 business buyout and business expense policies, the actuarial memorandum may be
			 limited to lifetime loss ratios as certified by an actuary and the minimum loss
			 ratio shall be :
1.60% for optionally renewable policies;
2.55% for conditionally renewable policies;
3.50% for guaranteed renewable policies; and
4.45% for guaranteed rate policies.
(d) for policies providing either
			 substantially full coverage for specified perils (
e.g
., auto,
			 common carrier) or short term non-renewable coverage (
e.g
.,
			 trip insurance) the minimum loss ratio is 45%;
(e) for policies providing coverage for
			 accidents only, the minimum loss ratio shall be 45%;
(f) for policies meeting the requirements of
			 both 211 CMR 42.06(2)(d) and 42.06(2)(e), the minimum loss ratio is
			 45%;
(g) for policies issued to and
			 actually held by persons ages 65 or older, the minimum loss ratio shall be
			 65%;
(h) for policies under 211 CMR
			 42.06(2)(b) or 42.06(2)(c), the minimum loss ratio shall be five percentage
			 points less than those given if the expected average annual premium for the
			 policy, including riders and endorsements, is less than $200; and
(i) for long- term care insurance policies,
			 whether the filling is for an initial or revised rate, the aggregate lifetime
			 loss ratio shall be no less than 60% for policies sold as standard individual
			 policies and no less than 80% for policies sold as group conversion policies;
			 provided, that "aggregate lifetime loss ratio" means the present value at the
			 form's inception of all expected future benefits under the form divided by the
			 present value at the form's inception of all future premiums to be received
			 under the form; and
(j) for
			 specified disease policies, whether the filing is for an initial or revised
			 rate, the minimum loss ratio shall be no less than 60% for individual policies;
			 any rate filing for a specified disease insurance policy shall state the
			 carrier's Expected Durational Loss Ratios that will be used in completing
			 future experience monitoring forms described in
			 211
			 CMR 146.102.
(k) if, for any policy which provides
			 benefits of substantial economic value to the insured, it can be demonstrated
			 that the minimum loss ratio standards given above cannot possibly be attained,
			 a lower loss ratio is allowable.