Washington Administrative Code › Title 284 - Insurance Commissioner, Office of the › Chapter 284-54 - Long-term care insurance rules › Section 284-54-620 - Loss ratio - Grouping of contract forms

Current through Register Vol. 24-14, July 15, 2024
For purposes of rate making and requests for rate
				increase.
(1) The actuary responsible
			 for setting premium rates shall group similar contract forms, including forms
			 no longer being marketed if issued on or after January 1, 1988, in the pricing
			 calculations. Such grouping shall rely on the judgment of the pricing actuary
			 and be satisfactory to the commissioner. Among the factors which shall be
			 considered are similar claims experience, types of benefits, reserves, margins
			 for contingencies, expenses and profit, and equity between contract holders.
			 Such grouping shall enhance statistical reliability and improve the likelihood
			 of premium adequacy without introducing elements of discrimination in violation
			 of RCW
			  48.44.220 or
			 48.46.370.
(2) The insureds under similar contract forms
			 are grouped at the time of rate making in accord with
			 RCW
			  48.44.220 or
			 48.46.370 because they are
			 expected to have substantially like insuring, risk and exposure factors and
			 expense elements. The morbidity and mortality experience of these insureds
			 will, as a group, deteriorate over time. It is hereby defined to be an unfair
			 discriminatory practice and therefore prohibited pursuant to
			 RCW
			  48.44.220 or
			 48.46.370 and
			 48.84.040(3) to
			 withdraw a form from its assigned grouping by reason of the deteriorating
			 health of the insureds covered thereunder.
(3) One or more of the contract forms grouped
			 for rate making purposes may, by random chance, experience significantly higher
			 or more frequent claims than the other forms. It is hereby defined to be an
			 unfair discriminatory practice and therefore prohibited pursuant to
			 RCW
			  48.44.220 or
			 48.46.370, to deviate from the
			 assigned grouping of contract forms for pricing purposes at the time of
			 requesting a rate increase unless the pricing actuary can justify to the
			 satisfaction of the commissioner that a different grouping is more equitable
			 because of some previously unrecognized and nonrandom distinction between forms
			 or between groups of insureds.
(4)
			 Successive contract forms of similar benefits are sometimes introduced by
			 health care service contractors and health maintenance organizations for the
			 purpose of keeping up with trends in hospital costs, new developments in
			 medical practice, additional supplemental benefits offered by competitors, and
			 other reasons. While this is commendable, contract holders who can not qualify
			 for the new improved contracts, or to whom the new benefits are not offered,
			 are left isolated as a high risk group under the prior form and soon become
			 subject to massive rate increases. It is hereby defined to be an unfair
			 discriminatory practice and therefore prohibited pursuant to
			 RCW
			  48.44.220 or
			 48.46.370 and
			 48.84.040(3), to
			 fail to combine successive generic contract forms and to fail to combine
			 contract forms of similar benefits covering generations of contract holders in
			 the calculation of premium rate and loss ratios.
Statutory Authority:
				  RCW
				  48.02.060(3),
				  48.30.010 and
				  48.84.910. 87-15-027 (Order R
				  87-7), §
										284-54-620, filed
				  7/9/87.