N.Y. Comp. Codes R. & Regs. tit. 11 § 360.10

Current through Register Vol. 46, No. 50, December 11, 2024

Section 360.10 - Filing and approval of rates by commercial insurers intending to change to a community rating methodology

(a)Rate filing rules.

(1) A community rating methodology must be applied to the following policies as of April 1, 1993, unless otherwise specified:

(i) all small group policies;

(ii) all optionally renewable and conditionally renewable individual policies;

(iii) all policies that are guaranteed renewable, as that term is defined in sections 52.17(a)(5) or (6) and 58.1(b)(1) of this Title issued on or after February 1, 1993, including previously issued policies on such forms issued as guaranteed renewable; and

(iv) all individual or group policies issued pursuant to a statutory or contractual right of conversion, except for conversions from and to guaranteed renewable and noncancellable individual forms issued prior to July 17, 1992.

(b) Premium rate filings designed to comply with the community rating mandate on April 1, 1993 should be submitted to the department as soon as a complete filing can be prepared, conforming to the requirements of this regulation, but such filing should be received by the department no later than January 29, 1993, in order for the insurer to anticipate approval of such filing prior to April 1, 1993.

(c)Content of rate filings.

(1) Premium rate filings for individual policies submitted for department approval should contain the following:

(i) Revised or new rate manuals which specify policies as active or inactive. The rate manual must list the premium rates themselves, as well as any factors to be utilized in the calculation of the premium rates. Such revised pages or new manuals shall not contain references to, or premiums containing assumptions based upon claims experience, underwriting, substandard ratings, occupational limitations, and other now prohibited factors. Implementation by an insurer of revised rate manual pages, or new rate manuals, is contingent upon the insurer first obtaining the department's prior approval of the premium rates set forth therein.

(ii) An exhibit showing the complete experience for New York issued policyholders since inception, both yearly and in total, through December 31, 1991. Include written and earned premiums, dividends incurred, paid claims, each reserve component, the annual change in each reserve component, incurred claims, and incurred loss ratio for each calendar year. Premium, claim and dividend columns should be totalled to December 31, 1991.

(iii) A statement of the date the form was first offered for issue and the date it ceased to be offered in New York.

(iv) A history of any prior rate changes approved for such form in New York, specifying the percentage rate change and effective date (month, day, year) of each change.

(v) A statement of the ratio of the annualized community premium for the form to the annualized premium in effect as of September 30, 1992 based on each form's inforce on that date.

(vi) An exhibit displaying the results of the following comparative calculations and combinations, all based on each form's inforce as of September 30, 1992.

(a) The average annualized premium per policyholder at then effective rate levels.

(b) The average annualized premium per policyholder at the proposed community rate levels.

(c) A distribution of the number of policyholders whose ratio of annualized premium at the proposed community rate levels to the annualized premium as of September 30, 1992, fall within each 20 percent range above and below one; the total annualized premium within each such 20 percent range as of September 30, 1992; and the total annualized premium within each such range at the proposed community rates.

(vii) For forms to be offered on or after April 1, 1993, and for all forms for which the proposed community rates produce a ratio under subparagraph (v) of this paragraph that is greater than one, a detailed actuarial memorandum conforming to the requirements of section 52.40(d)(1)(i)-(iv), (vi), (vii), (ix), (x) and (xii) of Part 52 of this Title.

(2) Premium rate filings for small group policies submitted for department approval should contain the following:

(i) Revised or new rate manuals which specify policies as active or inactive. The first page of such manual shall display for active policies the actual schedule of premium rates for representative benefit packages, including the insurer's most commonly sold benefit package. The rate manual must list the premium rates themselves, as well as any factors to be utilized in the calculation of the premium rates, including any rate guarantees. Such rates, factors and the instructions for calculating the specific premium for any benefit package must be filed in consecutively numbered rate manual pages. Such revised pages or new manuals shall not contain references to, or premiums containing assumptions based upon, group claims experience, underwriting, substandard ratings, occupational limitations, and other now prohibited factors. Implementation by an insurer of revised rate manual pages, or new rate manuals, is contingent upon the insurer first obtaining the department's prior approval of the premium rates set forth therein. The premium rates may not be for a period longer than 12 months.

(ii) For calendar year 1991 and separately for the first six months of 1992, an exhibit of the experience of New York insureds under each form (or collection of forms) sold to a distinct market, such as a package of benefits marketed through a multiple employer trust, including written and earned premiums, dividends or experience rating refunds incurred, paid claims, each reserve component as of December 31, 1990, December 31, 1991 and June 30, 1992, incurred claims and incurred loss ratios.

(iii) A statement of the ratio of the annualized community premium for the form (or collection of forms) for each community to the annualized premium in effect for that community, both based on the inforce as of September 30, 1992 for the form(s).

(iv) An exhibit displaying the results of the following comparative calculations and combinations, all based on the inforce as of September 30, 1992 for the form(s):

(a) the average monthly premium per certificateholder at then effective rate levels;

(b) the average monthly premium per certificateholder at the proposed community rate levels;

(c) from each group's average monthly premium per certificateholder based on the effective rate levels on September 30, 1992, a distribution of the number of groups and the number of certificateholders within such groups, in each 20 percent range of premiums above and below the average monthly rate per certificateholder, and the total monthly premium within each such 20 percent range;

(d) from each group's average monthly premium per certificateholder based on the proposed community rates, a distribution of the number of groups and the number of certificateholders within such groups, in each 20 percent range of premiums above and below the average monthly rate per certificateholder, and the total monthly premium within each such 20 percent range; and

(e) a distribution of the number of groups and the number of certificateholders within such groups, whose ratio of average monthly premium per certificateholder under the proposed community rates to the average monthly premium per certificateholder under the rates in effect on September 30, 1992, fall within each 20 percent range above and below one.

(v) A detailed actuarial memorandum providing a complete justification of the rates being submitted, including reference to the relevant information used in the development of such justification, and a demonstration that the applicable minimum loss ratio of section 52.45 of Part 52 of this Title will be met. At a minimum, such justification shall include:

(a) Any adjustments to the aggregate annualized premium in effect as of September 30, 1992, for trend (showing each element of trend independently).

(b) Any adjustment made for anticipated extraordinary lapsation or growth.

(c) Any adjustment made for anticipated effect of the elimination of underwriting.

(d) Any adjustment for payments to or from the pools.

(d)Miscellaneous rules relating to filing and approval of community rates.

(1) The new rating classification should parallel the existing rate structure, except to eliminate variations by age, sex, occupation, income, substandard rating factors and discount or loading factors related to marital status, smoking or other lifestyle choices or circumstance.

(2) Policies that have been issued with individual restrictions or exclusion of coverage for specified conditions must eliminate such restrictions and exclusions no later than March 31, 1993.

(3) For policies subject to community-rating, whose renewal period extends beyond April 1, 1993, provision must be made for a refund of any premium in excess of the community rated premium for the pro rata portion of the period which extends beyond March 31, 1993. For those policies continuing inforce, such refund can be applied as a credit for the following period.

(e)Certification of rate filing.

(1) Each filing shall include a certification signed by the company's chief actuary and chief legal officer that the filing conforms to the requirements of New York law and regulation; that the prospective loss ratio under the form for the year April 1, 1993 - March 31, 1994 equals or exceeds the minimum loss ratio for the form under section 52.45 of this Title; and that the total anticipated loss ratio, past and future combined, equals or exceeds such minimum loss ratio.

N.Y. Comp. Codes R. & Regs. Tit. 11 § 360.10