Sec. 52.45. Minimum loss ratio standards

The standards referred to in section 52.40 and other applicable sections of this Part shall be as follows:

(a) Individual insurance.

The minimum loss ratio for such individual insurance shall be determined according to the following table:

Renewal clause*
Type of coverage	OR	CR	GR	NC	NR
Insurance, as defined in sections 52.5, 52.6, 52.7 of this Part and other hospital, medical, surgical coverage, including hospital indemnity	60%	55%	55%	50%	50%
Insurance, as defined in sections 52.12 and 52.13 of this Part	NA	NA	60%	NA	NA
Loss of income and other	60%	55%	50%	50%	50%

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Definitions of renewal clause:

(1) OR (Optionally Renewable): renewal is at the option of the insurance company.

(2) CR (Conditionally renewable): renewal can be declined by the insurance company only for stated reasons other than deterioration of health.

(3) GR (Guaranteed Renewable): as defined in sections 52.17(a)(6) and 52.25(b)(1) of this Part.

(4) NC (Noncancellable): as defined in section 52.17(a)(5) of this Part.

(5) NR (Nonrenewable): short-term nonrenewable with a maximum duration of one year and no contractual renewal provision. It is expected that the minimum loss ratios applicable to certain policy forms in this classification may be modified under subdivision (g) of this section.

except that if the policy form, other than long term care insurance, nursing home insurance only, home care insurance only, and nursing home and home care insurance, has an average annual premium less than $180, the minimum loss ratio shall be five percentage points less than otherwise applicable. The average annual premium per policy shall be computed by the insurer 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.

(b) Franchise insurance issued to ages under 65.

The minimum loss ratio for such franchise insurance shall be 60 percent.

(c) Individual and franchise insurance issued to ages 65 and over.

The minimum loss ratio for issue ages 65 and over for all such policies shall be 65 percent, unless one rate is charged for all ages under 65 and 65 and over and the policy is issued at all ages 25 and over in which case the applicable standard for policies issued to ages under 65 apply.

(d) Individual and franchise insurance no longer actively marketed.

The minimum expected future loss ratio with respect to the increased portion of premium due to premium increases on individual and franchise policies no longer actively marketed to the general public shall be 75 percent, unless necessary renewal expenses larger than 25 percent of premium have been demonstrated.

(e) Modifications to minimums upon recognition of dividends.

When dividends are recognized as benefits in the loss ratio calculations of section 52.40(c) or (d) of this Part, when they equal or exceed 15 percent of the premium in any year, and if the minimum loss ratio would not be met without inclusion of the dividends, the otherwise applicable minimum loss ratio shall be raised by five percent (for example, 50 percent to 55 percent). Each additional 10 percent of premium paid as dividends above 15 percent shall raise the minimum an additional five percent.

(f) Group and blanket insurance.

The minimum loss ratio for group and blanket insurance shall be 65 percent, except that:

(1) for insurance covering less than 50 persons at inception, excluding dependents, the minimum loss ratio shall be 60 percent;

(2) for Medicare supplement insurance, the minimum loss ratio shall be 75 percent as required by subdivision (i) of this section; and

(3) for long term care insurance, nursing home insurance only, home care insurance only and nursing home and home care insurance the minimum loss ratio shall be 70 percent.

(g) Special cases.

In certain cases where the superintendent has agreed that a particular policy form is of special and unique value to the public, considering such matters as availability and consumer demand, and where it has been demonstrated that the product cannot reasonably meet the otherwise applicable loss ratio standards, these standards may be modified or waived.

(h) Long term care insurance, nursing home insurance only, home care insurance only, and nursing home and home care insurance. The minimum loss ratio for issue ages 65 and over for all individual policies shall be 65 percent, and for issue ages 64 and below for all such policies shall be 60 percent.

(i) A Medicare supplement policy form or certificate form shall not be delivered or issued for delivery unless the policy form or the certificate form can be expected, as estimated for the entire period for which the rates are computed to provide coverage, to return to policyholders and certificateholders in the form of aggregate benefits (not including anticipated refunds or credits) provided under the policy form or certificate form:

(1) at least 75 percent of the aggregate amount of premiums earned in the case of group policies; or

(2) at least 65 percent of the aggregate amount of premiums earned in the case of individual policies, calculated on the basis of incurred claims experience or incurred health care expenses where coverage is provided by a health maintenance organization on a service rather than reimbursement basis and earned premiums for such period in accordance with accepted actuarial principles and practices.

(j) Specified disease coverage.

(1) The minimum loss ratio for specified disease policies or certificates written on an indemnity and recurring basis shall be:

(i) 60 percent in the case of individual insurance issued under the age of 65;

(ii) 65 percent in the case of individual insurance issued at ages 65 and over, except that if one rate is charged for all ages under 65 and 65 and over, and the policy or certificate is issued at all ages 25 and over, the applicable standard for a policy or certificate issued to ages under 65 shall apply;

(iii) 65 percent in the case of franchise insurance; and

(iv) 70 percent in the case of group or blanket insurance.

(2) The minimum loss ratio for specified disease policies or certificates written on an indemnity and non-recurring basis shall be:

(i) 60 percent in the case of individual insurance issued under the age of 65;

(ii) 65 percent in the case of individual insurance issued at ages 65 and over, except that if one rate is charged for all ages under 65 and 65 and over, and the policy or certificate is issued at all ages 25 and over, the applicable standard for policies or certificate issued to ages under 65 shall apply;

(iii) 65 percent in the case of franchise insurance; and

(iv) 70 percent in the case of group or blanket insurance.

(k) Volunteer firefighter enhanced cancer insurance.

The minimum loss ratio for volunteer firefighter enhanced cancer insurance shall be 75 percent.

Notation

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Definitions of renewal clause: