HB 678-FN – AS INTRODUCED
2009 SESSION
01/09
HOUSE BILL 678-FN
AN ACT relative to establishing a minimum medical loss ratio.
SPONSORS: Rep. Nord, Rock 1; Rep. Hammond, Hills 3
COMMITTEE: Commerce and Consumer Affairs
This bill establishes a minimum medical loss ratio for policies issued to small group employers and individuals under RSA 420-G. The bill also requires the loss ratio guarantee agreement to be in writing and contain certain provisions.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
09-0787
01/09
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Nine
AN ACT relative to establishing a minimum medical loss ratio.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Insurance; Approval of Rate Filings. Amend RSA 420-G:13 to read as follows:
420-G:13 Approval of Rate Filings.
I. No policy or contract of insurance or any certificate under such policy or contract or other evidence of coverage shall be issued to a small employer or an individual under this chapter until the premium rates have been filed and approved by the commissioner. The commissioner shall approve or disapprove such rates within 30 days of receipt. The commissioner may disapprove rate filings if the commissioner finds such rates to be excessive, inadequate, or contrary to the intent of this chapter. Rate filings that do not meet a loss ratio guarantee of 85 percent shall be deemed excessive.
II. Rates on all accident and health policy forms subject to this chapter shall be filed with the commissioner prior to implementation.
III. At the time new premium rates are filed on any previously approved individual or small group accident and health insurance policy form subject to this chapter, the benefits provided by the policy form shall be deemed reasonable to the premium charge and the rates deemed approved, provided that the insurer complies with the terms of a loss ratio guarantee filed with the commissioner. The loss ratio guarantee agreement shall be in writing and shall include at least the following:
(a) A recitation of the anticipated annual and lifetime loss ratio standards included in an actuarial memorandum filed with the policy form.
(b) A guarantee that the actual loss ratios in this state for the experience period in which the rates take effect, and for each experience period thereafter, will meet or exceed an annual loss ratio standard of 85 percent for all policy forms.
(c) A guarantee that the actual loss ratio results for each calendar year the rates are in effect shall be independently audited during the second quarter of the following year at the expense of the insurer. The audited results shall be reported to the commissioner no later than the date for filing the applicable accident and health policy experience exhibit. The audit shall be conducted in accordance with generally accepted auditing or actuarial standards and shall be signed by a certified public accountant or a member of the American Academy of Actuaries.
(d) A guarantee that affected policyholders in this state shall be issued a proportional refund of premiums paid in the amount necessary to bring the actual loss ratio up to the anticipated annual loss ratio standards. The total amount refunded in this state shall equal the dollar amount necessary to achieve the loss ratio standard, multiplied by the total premium earned in this state on the policy form and divided by the total premiums earned in this state on the policy form. The refund shall be made to all policyholders insured under the applicable policy form as of the last day of the experience period at issue and whose refund would equal $5 or more. The refund shall include interest at the then current accident and health reserve interest rate established by the National Association of Insurance Commissioners calculated from the last day of the experience period at issue until the date of payment, which shall be during the third quarter of the following year.
(e) A guarantee that refunds of less than $5 shall be aggregated by the insurer and paid to the department.
(f) A guarantee that no increase in premium rate obtained pursuant to this section shall be implemented on any policy in this state until after the policyholder has received at least 30 days advance notice of the planned increase.
(g) In this section, “loss ratio” means the ratio of incurred claims to earned premium by number of years of policy duration, for all combined durations.
(h) The commissioner shall adopt rules, pursuant to RSA 541-A, necessary for the proper administration of this section.
2 Effective Date. This act shall take effect January 1, 2010.
LBAO
09-0787
Revised 02/24/09
HB 678 FISCAL NOTE
AN ACT relative to establishing a minimum medical loss ratio.
FISCAL IMPACT:
The New Hampshire Insurance Department states this bill will have an indeterminable fiscal impact on state general fund and restricted revenues in FY 2010 and each year thereafter. There will be no fiscal impact on state, county, and local expenditures or county and local revenues.
METHODOLOGY:
The New Hampshire Insurance Department states this bill establishes a medical loss ratio of at least 85 percent for policies issued to small group employers and individuals under RSA 420-G. The Department states to the extent insurance premiums increase or decrease as a result of this bill, premium tax revenue to the general fund will change in FY 2010 and each year thereafter. This bill also requires insurers to refund policyholders in the amount necessary to bring the actual loss ratio up to the anticipated loss ratio standards, with all refunds under $5.00 paid to the Department. To the extent insurers issue refunds under $5.00, state general fund revenue may increase in FY 2010 and each year thereafter. Because the Department cannot estimate the degree to which premiums will change or refunds will be issued, the fiscal impact cannot be determined at this time.