Washington Administrative Code › Title 284 - Insurance Commissioner, Office of the › Chapter 284-60 - Disability insurance loss ratios › Section 284-60-040 - Grouping of policy forms for purposes of rate making and requests for rate increase

Current through Register Vol. 24-14, July 15, 2024
(1) The actuary
			 responsible for setting premium rates shall group similar policy forms,
			 including forms no longer being marketed, 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 policyholders. Such grouping shall
			 enhance statistical reliability and improve the likelihood of premium adequacy
			 without introducing elements of discrimination in violation of
			 RCW
			  48.18.480.
(2) The insureds under similar policy forms
			 are grouped at the time of rate making in accord with
			 RCW
			  48.18.480 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 and discriminatory
			 practice, pursuant to
			 RCW
			  48.01.030,
			 48.18.480 and
			 48.30.010, to withdraw a form from
			 its assigned grouping by reason only of the deteriorating health of the people
			 insured thereunder.
(3) One or more
			 of the policy 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 and discriminatory practice, pursuant to
			 RCW
			  48.01.030,
			 48.18.480 and
			 48.30.010, to deviate from the
			 assigned grouping of policy forms for pricing purposes at the time of
			 requesting a rate increase unless the 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
			 policy forms of similar benefits are sometimes introduced by the insurers 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, policyholders who can not qualify for
			 the new improved policies, or to whom the new benefits are not offered, are
			 left insured and 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
			 and discriminatory practice, pursuant to
			 RCW
			  48.01.030,
			 48.18.480 and
			 48.30.010, to fail to combine
			 successive generic policy forms and to fail to combine policy forms of similar
			 benefits covering generations of policyholders in the calculation of premium
			 rates and loss ratios.
Statutory Authority:
				  RCW
				  48.02.060. 83-14-002 (Order R 83-1), §
										284-60-040, filed 6/23/83,
				  effective 9/1/83.