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Virginia Administrative Code (Last Updated: January 10, 2017) |
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Title 14. Insurance |
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Agency 5. State Corporation Commission, Bureau of Insurance |
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Chapter 130. Rules Governing the Filing of Rates for Individual and Certain Group Accidentand Sickness Insurance Policy Forms |
Section 65. Reasonableness of benefits in relation to initial premiums
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A. Benefits shall be deemed reasonable in relation to premiums provided the anticipated loss ratio of the policy form, including riders and endorsements, is at least as great as specified below:
1. If the expected average annual premium is at least $200 but less than $1,000:
Type of Coverage
Renewal Clause
OR
CR
GR
NC
Other
Hospital Confinement Indemnity
60%
55%
55%
50%
60%
Disability Income Protection, Accident Only, Specified Disease and Other, whether paid on an expense incurred or indemnity basis
60%
55%
50%
45%
60%
Definitions of renewal clause:
OR - Optionally renewable: individual policy renewal is at the option of the insurance company.
CR - Conditionally renewable: renewal can be declined by the insurance company only for stated reasons other than deterioration of health or renewal can be declined on a geographic territory basis.
GR - Guaranteed renewable: renewal cannot be declined by the insurance company for any reason, but the insurance company can revise rates on a class basis.
NC - Noncancellable: renewal cannot be declined nor can rates be revised by the insurance company.
Other - Any other renewal or nonrenewal clauses (e.g., short term nonrenewable policies).
2. If the expected average annual premium is $100 or more but less than $200, subtract five percentage points from the numbers in the table in subdivision 1 of this subsection.
3. If the expected average annual premium is less than $100, subtract 10 percentage points from the numbers in the table in subdivision 1 of this subsection.
4. If the expected average annual premium is $1,000 or more, add five percentage points to the numbers in the table in subdivision 1 of this subsection.
5. Notwithstanding subdivision 1 of this subsection, group Medicare supplement policies, shall be expected to return to policyholders in the form of aggregate benefits under the policy at least 75% of the aggregate amount of premiums collected.
6. Notwithstanding subdivisions 1 and 5 of this subsection, for Medicare supplement policies issued prior to July 30, 1992, as a result of solicitation of individuals through the mails or by mass media advertising, which shall include both print and broadcast advertising, shall be expected to return to policyholders in the form of aggregate benefits under the policy at least 60% of the aggregate amount of premiums collected.
7. Notwithstanding subdivision 1 of this subsection, for Medicare supplement policies issued prior to July 30, 1992, sold on an individual rather than group basis shall be expected to return to policyholders in the form of aggregate benefits under the policy at least 60% of the aggregate amount of premiums collected.
8. Notwithstanding subdivisions 1 through 4 of this subsection, all health insurance coverage issued in the individual market shall be originally priced to meet a minimum 75% loss ratio and, except for student health insurance coverage, such coverage shall be guaranteed renewable or noncancellable.
9. Notwithstanding subdivisions 1 through 4 of this subsection, all health insurance coverage issued in the small group market shall be originally priced to meet a minimum 75% loss ratio and shall be guaranteed renewable or noncancellable.
The above anticipated loss ratio standards do not apply to a type of coverage where such standards are in conflict with specific statutes or regulations.
B. The average annual premium per policy and per member shall be computed by the health insurance issuer based on an anticipated distribution of business by all applicable criteria having a price difference, such as age, sex, amount, dependent status, rider frequency, etc., except assuming an annual mode for all policies (i.e., the fractional premium loading shall not affect the average annual premium or anticipated loss ratio calculation).
Historical Notes
Derived from Volume 29, Issue 20, eff. July 1, 2013; amended, Virginia Register Volume 32, Issue 09, eff. January 1, 2016.