Rule 20:06:13:21 Loss ratio standards.
ratio standards. A Medicare supplement policy form or certificate form may
not be delivered or issued for delivery in this state unless the policy form or
certificate form can be expected, as estimated for the entire period for which
rates are computed to provide coverage, to return the following to
policyholders and certificateholders in the form of aggregate benefits provided
under the policy form or certificate form, not including anticipated refunds or
credits, at least 75 percent of the aggregate amount of premiums earned in the
case of group policies or at least 65 percent of the aggregate amount of
premiums earned in the case of individual policies.
The ratios in this section shall be
based on incurred claims experience or incurred health care expenses if
coverage is provided by a health maintenance organization on a service rather
than reimbursement basis and on earned premiums for the period in accordance
with accepted actuarial principles and practices. Incurred health care expenses
where coverage is provided by a health maintenance organization may not include
home office and overhead costs; advertising costs; commissions and other
acquisition costs; taxes; capital costs; administrative costs; and claim
All filings of rates and rating
schedules must demonstrate that expected claims in relation to premiums comply
with the requirements of this section when combined with actual experience to
date. Filings of rate revisions must also demonstrate that the anticipated loss
ratio over the entire future period for which the revised rates are computed to
provide coverage can be expected to meet the applicable loss ratio standards.
Policies issued as a result of solicitations of individuals through the mail or
by mass media advertising, including both print and broadcast advertising,
shall be deemed to be individual policies.
For policies issued before July 17,
1992, expected claims in relation to premiums must meet the following
(1) The originally filed
anticipated loss ratio when combined with the actual experience since
(2) The applicable loss
ratio requirement from the first paragraph of this section, when combined with
actual experience to date, beginning with the effective date of this amendment;
(3) The applicable loss
ratio requirement from the first paragraph of this section over the entire
future period for which the rates are computed to provide coverage.
In meeting these requirements and for
the purpose of attaining credibility, an insurer may combine experience under
policy forms which provide substantially similar coverage. Once a combined form
is adopted, the insurer may not separate the experience except with the
approval of the director.
8 SDR 174, effective July 1, 1982; 12 SDR 151, 12 SDR 155, effective July 1,
1986; 18 SDR 225, effective July 17, 1992; 19 SDR 160, effective April 27,
1993; 22 SDR 107, effective February 18, 1996; 25 SDR 13, effective August 9,
1998; 26 SDR 26, effective September 1, 1999; 27 SDR 53, 27 SDR 54, effective
December 4, 2000; 30 SDR 39, effective September 28, 2003; 31 SDR 214,
effective July 6, 2005; 33 SDR 59, effective October 5, 2006; 36 SDR 209,
effective July 1, 2010.
Authority: SDCL 58-17A-2.
Implemented: SDCL 58-17A-2, 58-17A-5.
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