Sec. 38a-481. (Formerly Sec. 38-165). Approval of individual health application, policy form and rates. Medicare supplement policies and certificates: Age, gender, previous claim or medical history ra
Sec. 38a-481. (Formerly Sec. 38-165). Approval of individual health application, policy form and rates. Medicare supplement policies and certificates: Age,
gender, previous claim or medical history rating prohibited. Loss ratios. Optional
life insurance riders. Underwriting classifications, claim experience and health
status. Exceptions. Regulations. Certain refunds to be donated to The University
of Connecticut Health Center. (a) No individual health insurance policy shall be delivered or issued for delivery to any person in this state, nor shall any application, rider or
endorsement be used in connection with such policy, until a copy of the form thereof
and of the classification of risks and the premium rates have been filed with the commissioner. The commissioner shall adopt regulations, in accordance with chapter 54, to
establish a procedure for reviewing such policies. The commissioner shall disapprove
the use of such form at any time if it does not comply with the requirements of law, or
if it contains a provision or provisions which are unfair or deceptive or which encourage
misrepresentation of the policy. The commissioner shall notify, in writing, the insurer
which has filed any such form of the commissioner's disapproval, specifying the reasons
for disapproval, and ordering that no such insurer shall deliver or issue for delivery to
any person in this state a policy on or containing such form. The provisions of section
38a-19 shall apply to such orders.
(b) No rate filed under the provisions of subsection (a) of this section shall be effective until the expiration of thirty days after it has been filed or unless sooner approved
by the commissioner in accordance with regulations adopted pursuant to this subsection.
The commissioner shall adopt regulations, in accordance with chapter 54, to prescribe
standards to insure that such rates shall not be excessive, inadequate or unfairly discriminatory. The commissioner may disapprove such rate within thirty days after it has been
filed if it fails to comply with such standards, except that no rate filed under the provisions
of subsection (a) of this section for any Medicare supplement policy shall be effective
unless approved in accordance with section 38a-474.
(c) No insurance company, fraternal benefit society, hospital service corporation,
medical service corporation, health care center or other entity which delivers or issues for
delivery in this state any Medicare supplement policies or certificates shall incorporate in
its rates or determinations to grant coverage for Medicare supplement insurance policies
or certificates any factors or values based on the age, gender, previous claims history
or the medical condition of any person covered by such policy or certificate, except for
plans "H" to "J", inclusive, as provided in section 38a-495b. In plans "H" to "J", inclusive, previous claims history and the medical condition of the applicant may be used in
determinations to grant coverage under Medicare supplement policies and certificates
issued prior to January 1, 2006.
(d) Rates on a particular policy form will not be deemed excessive if the insurer
has filed a loss ratio guarantee with the Insurance Commissioner which meets the requirements of subsection (e) of this section provided (1) the form of such loss ratio
guarantee has been explicitly approved by the Insurance Commissioner, and (2) the
current expected lifetime loss ratio is not more than five per cent less than the filed
lifetime loss ratio as certified by an actuary. The insurer shall withdraw the policy form
if the commissioner determines that the lifetime loss ratio will not be met. Rates also
will not be deemed excessive if the insurer complies with the terms of the loss ratio
guarantee. The Insurance Commissioner may adopt regulations, in accordance with
chapter 54, to assure that the use of a loss ratio guarantee does not constitute an unfair
practice.
(e) Premium rates shall be deemed approved upon filing with the Insurance Commissioner if the filing is accompanied by a loss ratio guarantee. The loss ratio guarantee
shall be in writing, signed by an officer of the insurer, and shall contain as a minimum
the following:
(1) A recitation of the anticipated lifetime and durational target loss ratios contained
in the original actuarial memorandum filed with the policy form when it was originally
approved;
(2) A guarantee that the actual Connecticut loss ratios for the experience period in
which the new rates take effect and for each experience period thereafter until any new
rates are filed will meet or exceed the loss ratios referred to in subdivision (1) of this
subsection. If the annual earned premium volume in Connecticut under the particular
policy form is less than one million dollars and therefore not actuarially credible, the
loss ratio guarantee will be based on the actual nation-wide loss ratio for the policy
form. If the aggregate earned premium for all states is less than one million dollars, the
experience period will be extended until the end of the calendar year in which one million
dollars of earned premium is attained;
(3) A guarantee that the actual Connecticut or nation-wide loss ratio results, as the
case may be, for the experience period at issue will be independently audited by a certified public accountant or a member of the American Academy of Actuaries at the insurer's expense. The audit shall be done in the second quarter of the year following the
end of the experience period and the audited results must be reported to the Insurance
Commissioner not later than June thirtieth following the end of the experience period;
(4) A guarantee that affected Connecticut policyholders will be issued a proportional refund, which will be based on the premiums earned, of the amount necessary to
bring the actual loss ratio up to the anticipated loss ratio referred to in subdivision (1)
of this subsection. If nation-wide loss ratios are used, the total amount refunded in
Connecticut shall equal the dollar amount necessary to achieve the loss ratio standards
multiplied by the total premium earned from all Connecticut policyholders who will
receive refunds and divided by the total premium earned in all states on the policy form.
The refund shall be made to all Connecticut policyholders who are insured under the
applicable policy form as of the last day of the experience period and whose refund
would equal two dollars or more. The refund shall include interest, at six per cent, from
the end of the experience period until the date of payment. Payment shall be made
during the third quarter of the year following the experience period for which a refund
is determined to be due;
(5) A guarantee that refunds less than two dollars will be aggregated by the insurer.
The insurer shall deposit such amount in a separate interest-bearing account in which
all such amounts shall be deposited. At the end of each calendar year each such insurer
shall donate such amount to The University of Connecticut Health Center;
(6) A guarantee that the insurer, if directed by the Insurance Commissioner, shall
withdraw the policy form and cease the issuance of new policies under the form in this
state if the applicable loss ratio exceeds the durational target loss ratio for the experience
period by more than twenty per cent, provided the calculations are based on at least two
thousand policyholder-years of experience either in Connecticut or nation-wide.
(f) For the purposes of this section:
(1) "Loss ratio" means the ratio of incurred claims to earned premiums by the number of years of policy duration for all combined durations; and
(2) "Experience period" means the calendar year for which a loss ratio guarantee
is calculated.
(g) Nothing in this chapter shall preclude the issuance of an individual health insurance policy which includes an optional life insurance rider, provided the optional life
insurance rider must be filed with and approved by the Insurance Commissioner pursuant
to section 38a-430. Any company offering such policies for sale in this state shall be
licensed to sell life insurance in this state pursuant to the provisions of section 38a-41.
(h) No insurance company, fraternal benefit society, hospital service corporation,
medical service corporation, health care center or other entity which delivers, issues for
delivery, amends, renews or continues an individual health insurance policy in this
state on or after October 1, 2003, may (1) move an insured individual from a standard
underwriting classification to a substandard underwriting classification after the policy
is issued; or (2) increase premium rates due to the claim experience or health status of
an individual who is insured under the policy, except that the entity may increase premium rates for all individuals in an underwriting classification due to the claim experience or health status of the underwriting classification as a whole.
(1949 Rev., S. 6177; 1951, S. 2835d; 1967, P.A. 437, S. 1; P.A. 78-280, S. 6, 127; P.A. 88-230, S. 1, 12; 88-326, S. 4;
P.A. 90-243, S. 72; P.A. 91-311; P.A. 93-390, S. 5, 8; P.A. 96-51, S. 2; P.A. 03-119, S. 1; P.A. 05-20, S. 3.)
History: 1967 act added Subsec. (b) re effective date of rates and rate standards; P.A. 78-280 replaced "Hartford county"
with "judicial district of Hartford-New Britain" in Subsec. (a); P.A. 88-230 proposed to replace reference to "judicial
district of Hartford-New Britain" with "judicial district of Hartford", effective September 1, 1991, but said reference was
deleted by P.A. 88-326; P.A. 88-326 required the commissioner to adopt regulations establishing a procedure for policy
review and rephrased existing provisions; P.A. 90-243 substituted reference to "individual health insurance policy" for
references to insurance against loss from sickness, bodily injury or accidental death; Sec. 38-165 transferred to Sec. 38a-481 in 1991; P.A. 91-311 amended Subsec. (b) to exclude Medicare supplement policy rates unless filed in accordance
with Sec. 38a-474, added a new Subsec. (c) re filing of the required loss ratio guarantee form to preclude the claim that a
particular policy has excessive rates and added the discretionary authority for the commissioner to adopt regulations re
the terms of the loss ratio guarantee, added a new Subsec. (d) re premium rates if filed with a loss ratio guarantee and
outlining the minimum requirements of a loss ratio guarantee in order to meet the commissioner's approval, the refund
procedure for Connecticut policyholders and the procedures by which a policy form can be withdrawn and added Subsec.
(e) defining "loss ratio" and "experience period"; P.A. 93-390 inserted new Subsec. (c) prohibiting the incorporation of
factors for age, gender, previous claim or medical condition history into the insurer's rate schedule and relettered the
remaining Subsecs. and internal references accordingly, effective January 1, 1994; P.A. 96-51 added Subsec. (g) to permit
optional life insurance riders; P.A. 03-119 added Subsec. (h) re underwriting classifications; P.A. 05-20 made technical
changes and amended provisions re regulations throughout, amended Subsec. (c) re Medicare supplements to reference
"determinations to grant coverage" and plans "H" to "J", inclusive, "issued prior to January 1, 2006," re use of claims
history and medical condition, amended Subsec. (d) to insert Subdiv. designators (1) and (2), and amended Subsec. (e)(5)
to delete provisions re donations to Uncas-on-Thames Hospital, effective July 1, 2005.
See Sec. 38a-477a re notification by Insurance Commissioner of required benefits and policy forms.
See Sec. 38a-504 re insurance policy or contract requirements covering surgical removal of tumors and treatment of
leukemia.
Annotation to former section 38-165:
Cited. 186 C. 507.