Michigan Administrative Code › Department - Insurance and Financial Services › Insurance › Credit Insurance Rates, Forms, And Standards › Section R. 550.214 - Deviation procedures

Current through Vol. 24-12, July 15, 2024
Rule 14.
(1) As used
				in this rule:
(a) "Account" means the coverage
				for a single plan of benefits offered by 1 creditor. Single life and joint life
				together is 1 plan of benefits; however, the various elimination and
				retroactive terms on accident and health create separate plans of benefits. The
				definition of "account" includes coverage which is written on a group or
				individual policy basis.
(b)
				"Adjusted actual loss ratio (AALR)," for a case, means the ratio of actual
				incurred claims to actual earned premium adjusted to prima facie as described
				in subdivision (f) of this subrule.
(c) "Average number of life years" means the
				average number of group certificates or individual policies in force during the
				experience period, without regard to multiple coverage, times the number of
				years in the experience period, or some equivalent calculation.
(d) "Case" means a single account case, a
				multiple account case, or a pooled account case as follows:
(i) "Single account case" means an account
				that has a credibility factor of not less than .65 for the experience period,
				excluding all of these accounts which have been included in multiple account
				cases.
(ii) "Multiple account case"
				means, with the approval of the commissioner, that 2 or more accounts of the
				same insurer having similar underwriting characteristics are combined by the
				insurer for premium rating purposes, excluding all cases defined in paragraph
				(i) of this subdivision and which, when combined, have a credibility factor of
				not less than .65 for the experience period.
(iii) "Pooled account case" means a
				combination of all the insurer's accounts of the same plan of insurance and
				class of business, which combination has experience in this state, excluding
				all cases defined in paragraphs (i) and (ii) of this subdivision.
(e) "Credibility measure" means 1
				of the following, chosen by the insurance company:
(i) Number of claims.
(ii) Average number of life years.
(iii) Earned premium. The same measure shall
				be used for life and accident and health and for the entire state. An insurer
				shall notify the commissioner in advance of which method it will use to measure
				the credibility of all its cases in this state and shall not change its method
				without the prior approval of the commissioner.
(f) "Earned premium" means premiums earned at
				the level of the prima facie rates. If the rates applicable to an account are
				not at the prima facie level or at a level percentage of the prima facie rates,
				the amount of premium which would have been earned at the prima facie rates may
				be calculated using reasonable approximations.
(g) "Experience period" means the most recent
				3 experience years or a lower number of full years, if full credibility is
				reached (credibility factor equals 1.00), for that case as shown in the
				credibility table. The same period shall be used for determining credibility
				and upward deviations.
(h)
				"Experience year," for a group policy, means a 12-month period ending on the
				policy anniversary or renewal date or on a calendar year end. Experience year
				for individual policies or a case means a calendar year. Experience for a given
				case shall be reported consistently from year to year.
(i) "Incurred claim count" means the number
				of claims incurred for the case during the experience period. This means the
				total number of claims reported during the experience period, whether paid or
				in the process of payment, plus an incurred but not reported (IBNR) at the end
				of the experience period, less the number of claims incurred but not reported
				at the beginning of the experience period. If a debtor has been issued more
				than 1 certificate for the same plan of insurance, only 1 claim is counted. If
				a debtor receives disability benefits, only the initial claim payment for that
				period of disability is counted.
(j) "Incurred claims" means total claims paid
				during the experience period, adjusted for the change in the claim
				reserve.
(k) "Minimum loss ratio"
				(MLR) is .60.