Washington Administrative Code › Title 284 - Insurance Commissioner, Office of the › Chapter 284-66 - Washington medicare supplement insurance regulation › Section 284-66-200 - Standards for loss ratios

Current through Register Vol. 24-14, July 15, 2024
The following standards apply to policies issued or delivered
				before July 1, 1992, unless the policies are approved under the standards of
				WAC 284-66-063 and
				284-66-203. Medicare supplement
				insurance policies must return to policyholders in the form of aggregated
				benefits under the policy, for the entire period for which rates are computed
				to provide coverage, loss ratios not less than those in this section. The loss
				ratios must be on the basis of incurred claims losses and earned premiums for
				such period according to accepted actuarial principles. The loss ratio
				standards of this section are more stringent and more appropriate than those
				imposed by
				RCW
				 48.66.100, and are necessary for the
				protection of the public interest.
(1)
			 Where coverage is provided on a service rather than reimbursement basis, the
			 loss ratios must be on the basis of incurred health care expenses and earned
			 premiums for the period.
(2) All
			 filings of rates and rating schedules must demonstrate that actual and expected
			 losses in relation to premiums comply with the requirements of this chapter and
			 are not excessive, inadequate or unfairly discriminatory.
(3) Every insurer providing medicare
			 supplement policies in this state must annually file its rates, rating
			 schedules, and supporting documentation including ratios of incurred losses to
			 earned premiums demonstrating that it is in compliance with the applicable loss
			 ratio standards and that the rating period for the policy is reasonable
			 according to accepted actuarial principles and experience. If the initial
			 rating period for the policy is more than one year, ratios of incurred losses
			 to earned premiums must be filed by number of years of policy duration.
			 Supporting documentation must include the amounts of unearned premium reserve,
			 policy reserves, and claim reserves and liabilities, both nationally and for
			 this state. This annual filing is in addition to filings made by insurers to
			 establish initial rates or request rate adjustments required by WAC
			 284-66-240.
(4) Incurred losses must include claims paid
			 and the change in claim reserves and liabilities. Incurred losses may not
			 include policy reserves, home office or field overhead, acquisition and selling
			 costs, taxes or other expenses, contributions to surplus, profit, or claims
			 processing costs. Where coverage is provided by a health care service
			 contractor or health maintenance organization, health care expense costs may
			 not include home office and overhead costs, advertising costs, commissions and
			 other acquisition costs, taxes, capital costs, administrative costs, and claims
			 processing costs.
(5) The following
			 criteria will be used to determine whether policy forms are in compliance with
			 the loss ratio standards of this section:
(a)
			 For the most recent year, the ratio of the incurred losses to earned premiums
			 is greater than or equal to the applicable percentages contained in this
			 section; and
(b) The expected
			 losses in relation to premiums over the entire rating period complies with the
			 requirements of this section, relying on the judgment of the pricing actuary
			 and acceptable to the commissioner; and
(c) For purposes of rate making and rate
			 adjustments, similar policy forms must be grouped together according to the
			 rules set forth in WAC
			 284-60-040. All medicare
			 supplement policies of an issuer issued for delivery between January 1, 1989,
			 and July 1, 1992, are considered "similar policy forms" except those forms
			 specifically approved under the standards of WAC
			 284-66-063 and
			 284-66-203.
(d) The commissioner may consider additional
			 criteria including, but not limited to:
(i)
			 Equitable treatment of policyholders; and
(ii) The amount of policy reserves as defined
			 for the insurer's statutory annual statement.