20:06:21:63. Premium rate schedule increases -- Notice of pending increase. An insurer shall provide notice of a pending premium rate schedule increase, including an exceptional increase, to the director at least 30 days prior to the notice to the policyholders, and shall include:
(1) Information required by § 20:06:21:60;
(2) Certification by a qualified actuary that:
(a) If the requested premium rate schedule increase is implemented and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increases are anticipated;
(b) The premium rate filing is in compliance with the provisions of this section;
(3) An actuarial memorandum justifying the rate schedule change request that includes:
(a) Lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase; and the method and assumptions used in determining the projected values, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale;
(i) Annual values for the five years preceding the three years following the valuation date shall be provided separately;
(ii) The projections shall include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase;
(iii) The projections shall demonstrate compliance with § 20:06:21:64; and
(iv) For exceptional increases:
(I) The projected experience must be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase; and
(II) In the event the director determines as provided in § 20:06:21:70 that offsets may exist, the insurer shall use appropriate net projected experience;
(b) Disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse;
(c) Disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the company have been relied on by the actuary;
(d) A statement that policy design, underwriting, and claims adjudication practices have been taken into consideration; and
(e) In the event that it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, the insurer will need to file composite rates reflecting projections of new certificates;
(4) A statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the director; and
(5) Sufficient information for review and approval of the premium rate schedule increase by the director.
Source: 28 SDR 157, effective May 19, 2002.
General Authority: SDCL 58-17B-4.
Law Implemented: SDCL 58-17B-4.
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