69O-203.045. Rates

(1) Before charging premiums to subscribers, a PLHSO shall file the rating methodology by which those premiums were determined with the Office. The Office must approve the methodologies and premium rates before use. Filings of rating methodologies shall provide adequate information, so that the Office, in accordance with generally accepted actuarial principles as applied to Prepaid Limited Health Service Organizations, may verify that the rating methodology does not produce inadequate, excessive, or unfairly discriminatory premiums. The Office will consider the limited services provided, the method in which services are provided, and the method of provider payment to determine whether a rate is in compliance.

(2) All rate classifications should be clearly identified, and the formulas and/or methods of calculating premiums adequately described.

(3) An actuarial memorandum shall be provided for each new product filing, rate revision or justification of existing rates. The pricing assumptions shall reflect organizational experience to the degree credible and industry experience where organizational experience is not credible, available or appropriate. All such items shall be actuarially justified by supporting data. In reviewing these assumptions, the Office will use, as an initial point of reference, comparisons of the assumptions with those from similar products of the same organization, similar products of other organizations and independent studies. The memorandum must contain the following items:

(a) Morbidity. This section shall describe the morbidity basis for the plan, including the source or sources used. The relationship between the morbidity assumptions and the benefits provided by the contract must be clearly demonstrated.

(b) Expenses. This section shall include a description of any expense assumptions used, including, but not limited to, per policy and percentage of premium expenses for acquisition, maintenance, commissions and state premium taxes.

(c) Contingency and Risk Margins. This section shall describe the margins anticipated for the contract at the time of the filing.

(4) To determine whether premium rates are excessive, the Office shall consider all items presented in the actuarial memorandum. In addition, significant attention shall be paid to the results provided in the organization’s financial reports made with the Office.

(5) Rates are inadequate if the anticipated or actual revenues derived from the rating structure plus investment income are not at least equal to the anticipated or actual costs of benefits provided during the period for which the rates are to be effective plus the contract’s expenses. For this analysis, investment income shall not exceed 3% of total projected revenues.

(6) Premiums are unfairly discriminatory if the benefit or expense portion of the premium is inadequate or excessive for any subgroup of risks.

(7) Rate filings shall be signed by a qualified actuary, who shall be a member of either the Society of Actuaries or the American Academy of Actuaries, and who is experienced in the development of rating methodologies for PLHSOs, or a qualified employee. Such rate filings shall include a certification that:

(a) The rates are neither inadequate nor excessive nor unfairly discriminatory;

(b) The rates are appropriate for the classes of risks for which they have been computed.

(8) Filing Format for All Rate Filings. A filing shall consist of one copy of each of the following:

(a) A brief letter explaining the type and nature of the filing. The letter shall indicate if the filing is for a new product, a rate revision, or a resubmission. If the filing is a resubmission, the letter shall indicate when the previous filing was submitted, the Florida filing number, and the date of the disapproval.

(b) Form OIR-1507, “Office of Insurance Regulation, Life and Health Forms and Rates Universal Standardized Data Letter,” completely filled out in accordance with Form OIR-1507A, “Office of Insurance Regulation, Life and Health Forms and Rates Universal Standardized Data Letter Instruction Sheet” as adopted by rule 69O-149.022, F.A.C.

(c) An actuarial memorandum, consistent with the requirements of rule 69O-203.045, F.A.C.

(d) Rate pages that define all proposed rates, rating factors, and methodologies for determining rates applicable in the state.

(9) Filings shall be submitted electronically to http://www.floir.com/iportal.

Rulemaking Authority 636.067 FS. Law Implemented 624.424, 636.017, 636.018, 636.043 FS. History–New 11-15-94, Amended 9-23-02, Formerly 4-203.045, Amended 7-30-17.