Oregon Bulletin
Rule
Caption: Require risk based capital trend
test by property and casualty insurers.
Adm.
Order No.: ID 14-2011
Filed with Sec. of
State: 10-31-2011
Certified to be
Effective: 10-31-11
Notice Publication
Date: 9-1-2011
Rules Amended: 836-011-0300, 836-011-0305, 836-011-0310,
836-011-0320, 836-011-0380, 836-011-0390
Subject: This rule provides the Insurance Division with an additional
tool to determine whether a property and casualty insurer falls within a risk
based capital (RBC) company action level. Current rules define a company ac
tion level as an RBC ratio of 200 percent. This rule requires the Division to
take action if a company’s RBC falls between 200 and 300 percent and its
combined ratio is above 120 percent. This additional tool assists in
determining whether an insurer is maintaining adequate capital and surplus to
meet statutory requirements and policyholder obligations.
The changes to
the rules also correct and update internal references.
Rules Coordinator: Sue Munson—(503) 947-7272
836-011-0300
Statutory Authority; Statutes
Implemented
(1) OAR 836-011-0300 to 836-011-0390 apply to insurers
that are subject to the capital and surplus requirements of ORS 731.554 and
insurers that are subject to the capital and surplus requirements of 731.566.
(2) OAR 836-011-0300 to 836-011-0390 are adopted
pursuant to the authority of ORS 731.244, 731.554, 731.574 and 733.210 for the
purpose of implementing 731.554 and 731.574.
Stat. Auth.: ORS 731.244, ORS
731.554 & ORS 733.210
Stats. Implemented: ORS 731.554
& ORS 731.574
Hist.: ID 7-1995, f. & cert.
ef. 11-15-95; ID 14-2011, f. & cert. ef. 10-31-11
836-011-0305
Definitions
As used in OAR 836-011-0300 to 836-011-0390:
(1) “Adjusted RBC report” means a risk-based capital
(RBC) report that has been adjusted by the Director in accordance with OAR
836-011-0310(5).
(2) “Corrective order” means an order issued by the
Director specifying corrective actions that the Director has determined are
required.
(3) “NAIC” means the National Association of Insurance
Commissioners.
(4) “Life or health insurer” means an insurer
transacting life insurance or health insurance or both or an insurer authorized
to transact property and casualty insurance but writing only health insurance.
(5) “Property and casualty insurer” means an insurer
transacting property and casualty insurance, or either, but does not include an
insurer transacting only monoline mortgage guaranty insurance, financial
guaranty insurance or title insurance, or an insurer authorized to transact
property and casualty insurance but writing only health insurance.
(6) “Negative trend” means, with respect to a life or
health insurer, negative trend over a period of time, as determined in
accordance with the “trend test calculation” included in the RBC instructions.
(7) “RBC instructions” means the RBC report, including
risk-based capital instructions adopted by the NAIC, as such RBC instructions
may be amended by the NAIC from time to time in accordance with the procedures
adopted by the NAIC and identified by the Department of Consumer and Business
Services to be applicable to the RBC report period. RBC instructions may be
obtained by contacting the Insurance Division of the Department of Consumer and
Business Services using the contact information provided on the Insurance
Division website at: http://insurance.oregon.gov/Contactus.html .
(8) “RBC level” means an insurer’s company action level
RBC, regulatory action level RBC, authorized control level RBC, or mandatory
control level RBC, defined as follows:
(a) “Company action level RBC” means, with respect to
any insurer, the product of 2.0 and its authorized control level RBC;
(b) “Regulatory action level RBC” means the product of
1.5 and its authorized control level RBC;
(c) “Authorized control level RBC” means the number
determined under the risk-based capital formula in accordance with the RBC
instructions; and
(d) “Mandatory control level RBC” means the product of
.70 and the authorized control level RBC.
(9) “RBC plan” means a comprehensive financial plan
containing the elements specified in OAR 836-011-0320(2). If the Director
rejects the RBC plan and it is revised by the insurer with or without the
Director’s recommendation, the plan shall be called the “revised RBC plan.”
(10) “RBC report” means the report required in OAR
836-011-0310.
(11) “Total adjusted capital” means the sum of:
(a) An insurer’s statutory capital and surplus as determined
in accordance with the statutory accounting applicable to the annual financial
statements required to be filed under ORS 731.574; and
(b) Such other items, if any, as the RBC instructions
may provide.
Stat. Auth.: ORS 731.244, 731.554
& 733.210
Stats. Implemented: ORS 731.554
& 731.574
Hist.: ID 7-1995, f. & cert.
ef. 11-15-95; ID 14-2011, f. & cert. ef. 10-31-11
836-011-0310
RBC Reports
(1) Each domestic insurer shall, on or prior to each
March 1 (the “filing date”), prepare and submit to the Director a report of its
RBC levels as of the end of the calendar year just ended, in a form and
containing such information as is required by the RBC instructions. In
addition, each domestic insurer shall file its RBC report:
(a) With the NAIC in accordance with the RBC
instructions; and
(b) With the insurance commissioner in any state in
which the insurer is authorized to do business, if the insurance commissioner
has notified the insurer of its request in writing, in which case the insurer
shall file its RBC report not later than the later of:
(A) 15 days from the receipt of notice to file its RBC
report with that state; or
(B) The filing date.
(2) A life or health insurer’s RBC shall be determined
in accordance with the formula set forth in the RBC instructions. The formula
shall take into account (and may adjust for the covariance between) the
following, determined in each case by applying the factors in the manner set
forth in the RBC instructions:
(a) The risk with respect to the insurer’s assets;
(b) The risk of adverse insurance experience with
respect to the insurer’s liabilities and obligations;
(c) The interest rate risk with respect to the
insurer’s business; and
(d) All other business risks and such other relevant
risks as are set forth in the RBC instructions.
(3) A property and casualty insurer’s RBC shall be
determined in accordance with the formula set forth in the RBC instructions.
The formula shall take into account (and may adjust for the covariance between)
the following, determined in each case by applying the factors in the manner
set forth in the RBC instructions:
(a) Asset risk;
(b) Credit risk;
(c) Underwriting risk; and
(d) All other business risks and such other relevant
risks as are set forth in the RBC instructions.
(4) An excess of capital over the amount produced by
the risk-based capital requirements contained in OAR 836-011-0300 to
836-011-0390 and the formulas, schedules and instructions referenced in
836-011-0300 to 836-011-0390 is desirable in the business of insurance.
Accordingly, insurers should seek to maintain capital above the RBC levels
required by 836-011-0300 to 836-011-0390. additional capital is used and useful
in the insurance business and helps to secure an insurer against various risks
inherent in, or affecting, the business of insurance and not accounted for or
only partially measured by the risk-based capital requirements contained in
836-011-0300 to 836-011-0390.
(5) If a domestic insurer files an RBC report that in
the judgment of the Director is inaccurate, the Director shall adjust the RBC
report to correct the inaccuracy and shall notify the insurer of the
adjustment. The notice shall contain a statement of the reason for the
adjustment. An RBC report as so adjusted is an “adjusted RBC report” for
purposes of OAR 836-011-0300 to 836-011-0390.
Stat. Auth.: ORS 731.244, 731.554
& 733.210
Stats. Implemented: ORS 731.554
& 731.574
Hist.: ID 7-1995, f. & cert.
ef. 11-15-95; ID 14-2011, f. & cert. ef. 10-31-11
836-011-0320
Company Action Level Event
(1) “Company action level event” means any of the
following events:
(a) The filing of an RBC report by an insurer
indicating that:
(A) The insurer’s total adjusted capital is greater
than or equal to its regulatory action level RBC but less than its company
action level RBC;
(B) If a life or health insurer, the insurer has total
adjusted capital that is greater than or equal to its company action level RBC
but less than the product of its authorized control level RBC and 2.5 and has a
negative trend; or
(C) If a property and casualty insurer, the insurer has
total adjusted capital that is greater than or equal to its company action
level RBC but less than the product of its authorized control level RBC and 3.0
and triggers the trend test determined in accordance with the trend test
calculation included in the property and casualty RBC instructions.
(b) The notification by the Director to the insurer of
an adjusted RBC report that indicates an event in subsection (a) of this
section, if the insurer does not challenge the adjusted RBC report under OAR
836-011-0360; or
(c) If, pursuant to OAR 836-011-0360, an insurer
challenges an adjusted RBC report that indicates the event in subsection (a) of
this section, the notification by the Director to the insurer that the Director
has, after a hearing, rejected the insurer’s challenge.
(2) In the event of a company action level event, the
insurer shall prepare and submit to the Director an RBC plan that shall:
(a) Identify the conditions contributing to the company
action level event;
(b) Contain proposals of corrective actions that the
insurer intends to take and would be expected to result in the elimination of
the company action level event;
(c) Provide projections of the insurer’s financial
results in the current year and at least the four succeeding years, both in the
absence of proposed corrective actions and giving effect to the proposed
corrective actions, including projections of statutory operating income, net
income, capital and surplus. The projections for both new and renewal business
must include separate projections for each major line of business and
separately identify each significant income, expense and benefit component, if
the Director so requires;
(d) Identify the key assumptions affecting the
insurer’s projections and the sensitivity of the projections to the
assumptions; and
(e) Identify the quality of and problems associated
with the insurer’s business, including but not limited to its assets,
anticipated business growth and associated surplus strain, extraordinary exposure
to risk, mix of business and use of reinsurance, if any, in each case.
(3) The insurer shall submit the RBC Plan:
(a) Not later than the 45th day after the company
action level event; or
(b) If the insurer challenges an adjusted RBC report
pursuant to OAR 836-011-0360, not later than the 45th day after the Director’s
notification to the insurer that the Director has, after a hearing, rejected
the insurer’s challenge.
(4) Not later than the 60th day after an insurer has
submitted an RBC plan to the Director, the Director shall notify the insurer
whether the RBC plan shall be implemented or is unsatisfactory, in the judgment
of the Director. If the Director determines the RBC plan is unsatisfactory, the
notification to the insurer shall set forth the reasons for the determination
and may set forth proposed revisions that will render the RBC plan
satisfactory, in the judgment of the Director. Upon notification from the
Director, the insurer shall prepare a revised RBC plan, which may incorporate
by reference any revisions proposed by the Director, and shall submit the
revised RBC plan to the Director:
(a) Not later than the 45th day after the notification
from the Director; or
(b) If the insurer challenges the notification from the
Director under OAR 836-011-0360, not later than the 45th day after a
notification to the insurer that the Director has, after a hearing, rejected
the insurer’s challenge.
(5) In the event of a notification by the Director to
an insurer that the insurer’s RBC plan or revised RBC plan is unsatisfactory,
the Director at the Director’s discretion, subject to the insurer’s right to a
hearing under OAR 836-011-0360, may specify in the notification that the
notification constitutes a regulatory action level event.
(6) A domestic insurer that files an RBC plan or
revised RBC plan with the Director shall file a copy of the RBC plan or revised
RBC plan with the insurance commissioner in any state in which the insurer is
authorized to transact insurance if such a state has an RBC provision substantially
similar to ORS 731.752, and the insurance commissioner of that state has
notified the insurer of its request for the filing in writing. The insurer
shall file the copy in that state not later than the later of the following:
(a) The 15th day after receipt of the notice to file a
copy of its RBC plan or revised RBC plan with the state; or
(b) The date on which the RBC plan or revised RBC plan
is filed under section (3) or (4) of this rule, as applicable.
Stat. Auth.: ORS 731.244, 731.554
& 733.210
Stats. Implemented: ORS 731.554
& 731.574
Hist.: ID 7-1995, f. & cert.
ef. 11-15-95; ID 14-2011, f. & cert. ef. 10-31-11
836-011-0380
Supplemental Provisions; Exemption
(1) 836-011-0300 to 836-011-0390 are supplemental to
any other provisions of the laws of this state, and do not preclude or limit
any other powers or duties of the Director under such laws, including, but not
limited to, OAR 836-011-0100 to 836-011-0120.
(2) OAR 836-011-0300 to 836-011-0390 do not apply to
any domestic insurer transacting property and casualty insurance that:
(a) Writes direct business only in this state;
(b) Writes direct annual premiums of $2 million or
less; and
(c) Assumes no reinsurance in excess of five percent of
direct premium written.
Stat. Auth.: ORS 731.244, 731.554
& 733.210
Stats. Implemented: ORS 731.554
& 731.574
Hist.: ID 7-1995, f. & cert.
ef. 11-15-95; ID 14-2011, f. & cert. ef. 10-31-11
836-011-0390
Foreign Insurers
(1) A foreign insurer shall, upon the written request
of the Director, submit to the Director an RBC report as of the end of the
calendar year just ended on the later of:
(a) The date by which an RBC report would be required
to be filed by a domestic insurer under OAR 836-011-0300 to 836-011-0390; or
(b) The 15th day after the request is received by the
foreign insurer.
(2) A foreign insurer shall, at the written request of
the Director, promptly submit to the Director a copy of any RBC plan that is
filed with the insurance commissioner of any other state.
(3) In the event of a company action level event,
regulatory action level event or authorized control level event with respect to
any foreign insurer as determined under the statute or rule governing risk
based capital reporting applicable in the state of domicile of the insurer (or,
if no such statute or rule is in force in that state, under the provisions of
OAR 836-011-0300 to 836-011-0390), if the insurance commissioner of the state
of domicile of the foreign insurer fails to require the foreign insurer to file
an RBC plan in the manner specified under that state’s statute or rule
governing risk-based capital reporting (or, if no such statute or rule is in
force in that state, under 836-011-0320), the Director may require the foreign
insurer to file an RBC plan with the Director. In such event, the failure of
the foreign insurer to file an RBC plan with the Director shall be grounds to
order the insurer to cease and desist from writing new insurance business in
this state.
(4) In the event of a mandatory control level event
with respect to any foreign insurer, if a domiciliary receiver has not been
appointed with respect to the foreign insurer under the rehabilitation and
liquidation statute applicable in the state of domicile of the foreign insurer,
the Director may apply for an order under ORS 734.190 with respect to the
conservation of property of foreign insurers found in this state, and the
occurrence of the mandatory control level event shall be considered adequate
grounds for the application under 734.150(1) or (4).
Stat. Auth.: ORS 731.244, 731.554
& 733.210
Stats. Implemented: ORS 731.554
& 731.574
Hist.: ID 7-1995, f. & cert.
ef. 11-15-95; ID 14-2011, f. & cert. ef. 10-31-11
Rule
Caption: Clarifies applicability of
limitation on premium rate increases for Medical Supplement policies or certificates.
Adm.
Order No.: ID 15-2011
Filed with Sec. of
State: 10-31-2011
Certified to be
Effective: 10-31-11
Notice Publication
Date: 9-1-2011
Rules Amended: 836-052-0114, 836-052-0145, 836-052-0151
Subject: Amends rules to clarify that the provision that limits
premium increases for Medicare supplement insurance policies to once in a
12-month period does not apply to changes in policy or payment terms initiated
by the insured. Specifies that limitation applies to all existing 1990
Standardized Medicare supplement benefit plans and all 2010 Standardized
Medicare supplement policies or certificates renewed on or after January 1,
2012. Clarifies that the changes to the Exhibits to OAR 836-052-0160 effective
on February 17, 2011 apply to all Medicare supplement policies or certificates
issued on or after July 1, 2011 and that the limitation on premium increases
effective on February 17, 2011 applies to all new Medicare supplement policies
or certificates issued on or after July 1, 2011.
Rules Coordinator: Sue Munson—(503) 947-7272
836-052-0114
Applicability and Scope
(1) Except as otherwise specifically provided in OAR
836-052-0134, 836-052-0140, 836-052-0145, 836-052-0160 and 836-052-0185,
836-052-0103 to 836-052-0194 apply to the following Medicare supplement
policies and certificates issued under group Medicare supplement policies, as
follows:
(a) All Medicare supplement policies delivered or
issued for delivery in this state on or after July 1, 1992; and
(b) All certificates issued under group Medicare supplement
policies and delivered or issued for delivery in this state on or after July 1,
1992.
(2) Except as otherwise specifically provided in OAR
836-052-0134, 836-052-0140, 836-052-0154, 836-052-0160, and 836-052-0185, on or
after September 1, 1993, 836-052-0103 to 836-052-0194 apply to Medicare
supplement policies and certificates issued under group Medicare supplement
policies that are made subject to 836-052-0103 to 836-052-0194 because of
amendments to the definition of “Medicare supplement policy” in ORS 743.680 and
OAR 836-052-0119.
(3) A prepayment plan offered by a health maintenance
organization under which the health maintenance organization and competitive
medical plans provides Medicare services under the authority of Title XVIII
Part C of the Social Security Act or Section 1876 of the federal Social
Security Act (42 U.S.C. section 1395 et seq.) is not subject to OAR
836-052-0103 through 836-052-0194. The health maintenance organization and
competitive medical plans must file with the Director, for information
purposes, a copy of the Medicare contract forms and rates that the plan or
health maintenance organization uses in this state, and the marketing and sales
materials used therewith.
(4) OAR 836-052-0103 to 836-052-0194 do not apply to an
issued policy under a demonstration project specified in 42 U.S.C. sec. 1395ss
(g)(1).
(5) OAR 836-052-0103 to 836-052-0194 do not apply to a
policy or contract of one or more employers or labor organizations; or of the
trustees of a fund established by one or more employers or labor organizations,
or combination thereof; for employees or former employees, or a combination
thereof; or for members or former members, or a combination thereof, of the
labor organizations.
(6) OAR 836-052-0103 to 836-052-0194 are effective on
August 1, 2005. Insurers may continue using current forms, or may make changes
to current forms if offering Plan K or L, as appropriate, through 2005.
Insurers may offer any authorized plan upon approval by the Director of the
Department of Consumer and Business Services.
(7) The changes to OAR 836-052-0145 and 836-052-0151
effective on February 17, 2011 apply to all new Medicare supplement policies or
certificates issued on or after July 1, 2011. The changes to OAR 836-052-0145
and 836-052-0151 effective on February 17, 2011 apply to all existing 1990
Standardized Medicare supplement benefit plans and all 2010 Standardized
Medicare supplement benefit plans policies or certificates renewed on or after
January 1, 2012. The changes to the Exhibits to OAR 836-052-0160 effective on
February 17, 2011 apply to all Medicare supplement policies or certificates
issued on or after July 1, 2011.
Stat. Auth.: ORS 731.244 &
743.682
Stats. Implemented: ORS 743.010
& 743.683
Hist.: ID 1-1989(Temp), f. & cert.
ef. 1-3-89; ID 5-1989, f. 6-30-89, cert. ef. 7-3-89; ID 11-1990, f. 5-11-90,
cert. ef. 9-1-90; ID 7-1992, f. & cert. ef. 5-8-92; ID 5-1993(Temp), f.
8-11-93, cert. ef. 9-1-93; ID 9-1993, f. 9-28-93, cert. ef. 10-1-93; ID 5-1996,
f. & cert. ef. 4-26-96; ID 9-1997, f. & cert. ef. 7-10-97; ID 10-2005,
f. & cert. ef. 7-26-05; ID 7-2011, f. & cert. ef. 2-23-11; ID 15-2011,
f. & cert. ef. 10-31-11
836-052-0145
Loss Ratio Standards and Refund or
Credit of Premium
(1) The following provisions of this section establish
loss ratio standards:
(a) A Medicare supplement policy form or certificate
form shall not be delivered or issued for delivery 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 applicable percentage
specified in this section to the policyholder and certificate holder in the
form of aggregate benefits, not including anticipated refunds or credits,
provided under the policy form or certificate form:
(A) At least 75 percent of the aggregate amount of
premiums earned, in the case of group policies; or
(B) At least 65 percent of the aggregate amount of
premiums earned, in the case of individual policies.
(b) A percentage under subsection (a) of this
subsection shall be calculated on the basis of incurred claims experience or
incurred health care expenses where coverage is provided by a health
maintenance organization on a service rather than reimbursement basis and
earned premiums for the period and in accordance with accepted actuarial
principles and practices. Incurred health care expenses where coverage is
provided by a health maintenance organization shall not include:
(A) Home office and overhead costs;
(B) Advertising costs;
(C) Commissions and other acquisition costs;
(D) Taxes;
(E) Capital costs;
(F) Administrative costs; and
(G) Claims processing costs.
(c) All filings of rates and rating schedules shall
demonstrate that expected claims in relation to premiums comply with the requirements
of this rule when combined with actual experience to date. Filings of rate
revisions shall 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 appropriate loss ratio standards;
(d) For purposes of applying section (1)(a) of this
rule and section (3)(c) of OAR 836-052-0151 only, policies issued as a result
of solicitations of individuals through the mails or by mass media advertising
(including both print and broadcast advertising) shall be deemed to be
individual policies;
(e) For policies issued prior to September 1, 1993,
expected claims in relation to premiums shall meet:
(A) The originally filed anticipated loss ratio when
combined with the actual experience since inception;
(B) The appropriate loss ratio requirement from section
(1)(a)(A) and (B) of this rule when combined with actual experience beginning
with April 28, 1996, to date; and
(C) The appropriate loss ratio requirement from section
(1)(a)(A) and (B) of this rule over the entire future period for which the
rates are computed to provide coverage.
(2) The following provisions of this section apply to
refund and credit calculations:
(a) An issuer shall collect and file with the Director
by May 31 of each year the data contained in the applicable reporting form
contained in Exhibit 1 to this rule for each type in a standard Medicare
supplement benefit plan;
(b) If on the basis of the experience as reported, the
benchmark ratio since inception (ratio 1) exceeds the adjusted experience ratio
since inception (ratio 3), then a refund or credit calculation is required. The
refund calculation shall be done on a statewide basis for each type in a
standard Medicare supplement benefit plan. For purposes of the refund or credit
calculation, experience on policies issued within the reporting year shall be
excluded;
(c) For the purpose of this rule, policies or
certificates issued prior to September 1, 1993, the issuer shall make the
refund or credit calculation separately for all individual policies, including
all group policies subject to an individual loss ratio standard when issued,
combined and all other group policies combined for experience after April 28,
1996. The first such report shall be due by May 31, 1998.
(d) A refund or credit shall be made only when the
benchmark loss ratio exceeds the adjusted experience loss ratio and the amount
to be refunded or credited exceeds a negligible level. The refund must include
interest from the end of the calendar year to the date of the refund or credit
at a rate specified by the Secretary of Health and Human services, but in no
event shall it be less than the average rate of interest for 13-week Treasury
notes. A refund or credit against premiums due shall be made by September 30
following the experience year upon which the refund or credit is based.
(3) An issuer of Medicare supplement policies and
certificates issued before, on or after July 1, 1992, in this state shall file
annually its rates, rating schedule and supporting documentation, including
ratios of incurred losses to earned premiums by policy duration for approval by
the Director in accordance with the filing requirements and procedures
prescribed by the Director. The supporting documentation shall also demonstrate
in accordance with actuarial standards of practice using reasonable assumptions
that the appropriate loss ratio standards can be expected to be met over the
entire period for which rates are computed. The demonstration shall exclude
active life reserves. An expected third year loss ratio that is greater than or
equal to the applicable percentage shall be demonstrated for policies or
certificates in force less than three years. As soon as practicable, but prior
to the effective date of enhancements in Medicare benefits, every issuer of
Medicare supplement policies or certificates in this state shall file with the
Director for approval, in accordance with the applicable filing procedures of
this state the following:
(a)(A) Appropriate premium adjustments necessary to
produce loss ratios as anticipated for the current premium for the applicable
policies or certificates. Supporting documents necessary to justify the
adjustment shall accompany the filing.
(B) An issuer shall make premium adjustments necessary
to produce an expected loss ratio under the policy or certificate to conform to
minimum loss ratio standards for Medicare supplement policies and to be
expected to result in a loss ratio at least as great as that originally
anticipated in the rates used to produce current premiums by the issuer for the
Medicare supplement policies or certificates. No premium adjustment that would
modify the loss ratio experience under the policy other than the adjustments
described herein shall be made with respect to a policy at any time other than
upon its renewal date or anniversary date. Except as provided in OAR
836-052-0138, an insurer may not increase the rates for a Medicare supplement
policy or certificate issued in this state more than once in a 12-month period.
If an issuer intends to exercise the right to adjust a premium for age
attainment under OAR 836-052-0138, and such adjustment results in more than one
increase in a 12-month period, the issuer must provide written disclosure to
the consumer prior to the issuance of the policy or certificate. The limitation
on premium adjustments under this paragraph does not apply to a premium
adjustment that results from a change in the policy or premium payment terms
requested by an insured including but not limited to changes in the method of
payment such as discontinuing payment by a preauthorized electronic funds
transfer.
(C) If an issuer fails to make premium adjustments
acceptable to the Director, the Director may order premium adjustments, refunds
or premium credits that the Director considers necessary to achieve the loss
ratio required by this rule.
(b) Any appropriate riders, endorsements or policy
forms needed to accomplish the Medicare supplement policy or certificate modifications
necessary to eliminate benefit duplications with Medicare. The riders,
endorsements or policy forms shall provide a clear description of the Medicare
supplement benefits provided by the policy or certificate.
(4) For purposes of this rule, experience of insureds
who qualify for Medicare by reason of disability shall be combined with
experience of insureds who qualify for Medicare by reason of age.
(5) The Director may conduct a public hearing to gather
information concerning a request by an issuer for an increase in a rate for a
policy form or certificate form issued before, on or after July 1, 1992, if the
experience of the form for the previous reporting period is not in compliance
with the applicable loss ratio standard. The determination of compliance may be
made without consideration of any refund or credit for the reporting period.
Public notice of the hearing shall be furnished as the Director determines to
be appropriate.
[ED. NOTE: Exhibits referenced are
available from the agency.]
Stat. Auth.: ORS 743.684
Stats. Implemented: ORS 743.010
& 743.684
Hist.: ID 1-1989(Temp), f. &
cert. ef. 1-3-89; ID 5-1989, f. 6-30-89, cert. ef. 7-3-89; ID 11-1990, f.
5-11-90, cert. ef. 9-1-90; ID 7-1992, f. & cert. ef. 5-8-92; ID
5-1993(Temp), f. 8-11-93, cert. ef. 9-1-93; ID 9-1993, f. 9-28-93, cert. ef.
10-1-93; ID 5-1996, f. & cert. ef. 4-26-96; ID 9-1997, f. & cert. ef.
7-10-97; ID 8-2001(Temp), 6-15-01, cert. ef. 6-18-01 thru 12-10-01; ID 11-2001,
f. & cert. ef. 9-24-01; ID 10-2005, f. & cert. ef. 7-26-05; ID 7-2011,
f. & cert. ef. 2-23-11; ID 15-2011, f. & cert. ef. 10-31-11
836-052-0151
Filing and Approval of Policies
and Certificates and Premium Rates
(1) An issuer shall not deliver or issue for delivery a
policy or certificate to a resident of this state unless the policy form or
certificate form has been filed with and approved by the Director in accordance
with filing requirements and procedures prescribed by the Director.
(2) An issuer shall file any riders or amendments to
policy or certificate forms to delete outpatient prescription drug benefits as
required by the Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 only with the Insurance Commissioner in the state in which the policy
or certificate was issued.
(3)(a) An issuer shall not use or change premium rates
for a Medicare supplement policy or certificate unless the rates, rating
schedule and supporting documentation have been filed with and approved by the
Director in accordance with filing requirements and procedures prescribed by
the Director.
(b) Except for an adjustment of premium on the basis of
attained age under OAR 836-052-0138, an issuer may not increase the rates for a
Medicare supplement policy or certificate issued in this state more than once
in a 12-month period. Annual rate increases shall be effective on the policy or
certificate anniversary date or renewal date. If an issuer intends to exercise
the right to adjust a premium for age attainment under OAR 836-052-0138, and
such adjustment results in more than one increase in a 12-month period, the
issuer must provide written disclosure to the consumer prior to the issuance of
the policy or certificate. The limitation on premium adjustments under this
subsection does not apply to a premium adjustment that results from a change in
the policy or premium payment terms requested by an insured including but not
limited to changes in the method of payment such as discontinuing payment by a
preauthorized electronic funds transfer.
(4) Except as provided in this section, an issuer shall
not file for approval more than one form of a policy or certificate of each
type for each standard Medicare supplement benefit plan. For the purposes of
this section, a “type” means an individual policy or a group policy. An issuer may
offer, with the approval of the Director, not more than four additional policy
forms or certificate forms of the same type for the same standard Medicare
supplement benefit plan, one for each of the following cases:
(a) The inclusion of new or innovative benefits;
(b) The addition of either direct response or agent
marketing methods;
(c) The addition of either guaranteed issue or
underwritten coverage.
(5) The following applies to continuance and
discontinuance of Medicare supplement policies and certificates:
(a) Except as provided in this subsection, an issuer
shall continue to make available for purchase any policy form or certificate
form issued after July 1, 1992, that has been approved by the Director. A
policy form or certificate form shall not be considered to be available for
purchase unless the issuer has actively offered it for sale in the previous
twelve months. The following applies to discontinuance of a policy form or
certificate form to which this subsection applies:
(A) An issuer may discontinue the availability of a
policy form or certificate form for new issues if the issuer provides to the
Director in writing its decision at least 30 days prior to discontinuing the
availability of the form of the policy or certificate. After receipt of the
notice by the Director, the issuer shall no longer offer for sale the policy
form or certificate form in this state. The issuer must continue to renew
outstanding policies and certificates;
(B) An issuer that discontinues the availability of a
policy form or certificate form pursuant to paragraph (A) of this subsection
shall not file for approval a new policy form or certificate form of the same
type for the same standard Medicare supplement benefit plan as the discontinued
form for a period of five years after the issuer provides notice to the
Director of the discontinuance. The period of discontinuance may be reduced if
the Director determines that a shorter period is appropriate.
(b) The sale or other transfer of Medicare supplement
business to another issuer shall be considered a discontinuance for the
purposes of this subsection;
(c) A change in the rating structure or methodology
shall be considered a discontinuance under subsection (a) of this section
unless the issuer complies with the following requirements:
(A) The issuer provides an actuarial memorandum
satisfactory to the Director, in a form and manner prescribed by the Director,
describing the manner in which the revised rating methodology and resultant
rates differ from the existing rating methodology and existing rates;
(B) The issuer does not subsequently put into effect a
change of rates or rating factors that would cause the percentage differential
between the discontinued and subsequent rates as described in the actuarial
memorandum to change. The Director may approve a change to the differential
that is in the public interest.
(6) Except as provided in this section, the experience
of all policy forms or certificate forms of the same type in a standard
Medicare supplement benefit plan shall be combined for purposes of the refund
or credit calculation prescribed in OAR 836-052-0145. Forms assumed under an
assumption reinsurance agreement shall not be combined with the experience of
other forms for purposes of the refund or credit calculation.
Stat. Auth.: ORS 743.683
Stats. Implemented: ORS 743.010,
743.684(1)–(2) & 743.683(2)
Hist.: ID 7-1992, f. & cert.
ef. 5-8-92; ID 5-1993(Temp), f. 8-11-93, cert. ef. 9-1-93; ID 9-1993, f.
9-28-93, cert. ef. 10-1-93; ID 2-1995, f. & cert. ef. 4-26-95; ID 10-2005,
f. & cert. ef. 7-26-05; ID 7-2011, f. & cert. ef. 2-23-11; ID 15-2011,
f. & cert. ef. 10-31-11
Rule
Caption: Adoption of Oregon Companion
Guide for Health Care Claims: Professional, Dental and Institutional (837).
Adm.
Order No.: ID 16-2011
Filed with Sec. of
State: 10-31-2011
Certified to be
Effective: 10-31-11
Notice Publication
Date: 8-1-2011
Rules Amended: 836-100-0105, 836-100-0110, 836-100-0115
Subject: This rule adopts by reference uniform standards for
administrative simplification of health care claims transactions developed and
recommended by the Oregon Health Authority under Section 2, chapter 130, Oregon
Laws 2011 (replacing Section 1192, Chapter 595, Oregon Laws 2009. The standards
adopted by this rulemaking pertain to health care claims and encounter
transactions and are set forth in the “Oregon Companion Guide for the
Implementation of the EDI Transaction: ASC X12/005010X222 Health Care Claim:
Professional (837),” “The Oregon Companion Guide for the Implementation of the
EDI Transaction: ASC X12/005010X223 Health Care Claim: Institutional (837)” and
“The Oregon Companion Guide for the Implementation of the EDI Transaction: ASC
X12/005010X224 Health Care Claim: Dental (837).”
These rules also
establish a waiver for plans that are certified by the Council for Affordable
Quality Healthcare’s (CAQH) Committee on Operating Rules for Information
Exchange (CORE). Because the Oregon Companion Guides have been developed in
alignment with CORE and CORE is now recognized by federal agencies as the
national standard, meeting either the CORE or the Companion Guide standard will
allow for standardization.
The rules also
clarify that “health care entity” does not include a pharmacy or a pharmacy
benefits manager, thus exempting these entities from the requirements of the
rules.
Rules Coordinator: Sue Munson—(503) 947-7272
836-100-0105
Definitions
(1) “Electronic transaction” means to conduct a
transaction:
(a) Through the use of a computer program or an
electronic or other automated means independently to initiate an action or
respond to electronic records or performances in whole or in part, without
review or action by an individual; or
(b) Through the use of a web portal or the internet.
(2)(a) “Health care entity” includes:
(A) A health care service contractor as required under
ORS 750.055;
(B) A multiple employer welfare arrangement as required
under ORS 750.333;
(C) A prepaid managed care health services organization
as defined in ORS 414.736;
(D) Any entity licensed as a third party administrator
under ORS 744.702;
(E) Any person or public body that either individually
or jointly established a self-insurance plan, program or contract, including
but not limited to persons and public bodies that are otherwise exempt from the
Insurance Code under ORS 731.036;
(F) A health care clearinghouse or other entity that
processes or facilitates the processing of health care financial and
administrative transactions from a nonstandard format to a standard format; and
(G) Any other person identified by the department that
processes health care financial and administrative transactions between a
health care provider and an entity described in this subsection.
(b) “Health care entity” does not include a pharmacy or
a pharmacy benefits manager.
(3) “Health insurer” means any insurer authorized to
transact health insurance in Oregon.
(4) “Oregon Companion Guide” means one of the
compilations of uniform standards adopted by the Department of Consumer and
Business Services and posted on the Oregon Insurance Division’s website that
provide standards for health care financial and administrative transactions.
The following Oregon Companion Guides are applicable to respective transactions
with health insurers and health care entities in Oregon:
(a) Oregon Companion Guide for the Implementation of
the ASC X12N/005010X279 Health Care Eligibility Benefit Inquiry and Response
(270/271).
(b) The Oregon Companion Guide for the Implementation
of the EDI Transaction: ASC X12/005010X222 Health Care Claim: Professional (837).
(c) The Oregon Companion Guide for the Implementation
of the EDI Transaction: ASC X12/005010X223 Health Care Claim: Institutional
(837).
(d) The Oregon Companion Guide for the Implementation
of the EDI Transaction: ASC X12/005010X224 Health Care Claim: Dental (837).
(5) “Oregon Companion Guide Oversight Committee” means
the committee appointed jointly by the Department of Consumer and Business
Services and the Oregon Health Authority to carry out the responsibilities
under OAR 836-100-0120.
(6) “Provider” means a health care provider that
provides health care or medical services within Oregon for a fee and is
eligible for reimbursement for these services.
Stat. Auth.: ORS 731.244 &
2011 OL Ch. 130 Sec. 2 (Enrolled SB 94)
Stats. Implemented: 2011 OL Ch. 130
Sec. 2 (Enrolled SB 94)
Hist.: ID 12-2011, f. & cert.
ef. 7-15-11; ID 16-2011, f. & cert. ef. 10-31-11
836-100-0110
Adoption of Standards
(1) All health insurers and health care entities must
conduct eligibility benefit inquiry and response transactions with health care
providers as electronic transactions that conform to the uniform standards
developed by the Office for Oregon Health Policy and Research pursuant to
section 3, chapter 130, Oregon Laws 2011 (Enrolled Senate Bill 94) as set forth
in the Oregon Companion Guide for Health Care Eligibility Benefit Inquiry and
Response in accordance with the following schedule:
(a) On and after January 1, 2012 for those health care
providers that submit the inquiry electronically on the effective date of these
rules.
(b) On and after October 1, 2012, for all inquiries
from all health care providers.
(2) All health insurers and health care entities must
conduct claims or encounter transactions with health care providers in
conformance with the uniform standards developed by the Office for Oregon
Health Policy and Research pursuant to section 3, chapter 130, Oregon Laws 2011
(Enrolled Senate Bill 94) as set forth in the Oregon Companion Guide for Health
Care Claim: Professional, Oregon Companion Guide for Health Care Claim:
Institutional and Oregon Companion Guide for Health Care Claim: Dental in
accordance with the following schedule:
(a) On and after October 1, 2012 for those health care
providers that conduct claims or encounter transactions electronically on the
effective date of these rules.
(b) On and after January 1, 2013, all claims or
encounter transactions with all health care providers must be conducted
electronically.
Stat. Auth.: ORS 731.244 &
2011 OL Ch. 130 Sec. 2 (Enrolled SB 94)
Stats. Implemented: 2011 OL Ch.
130 Sec. 2 (Enrolled SB 94)
Hist.: ID 12-2011, f. & cert.
ef. 7-15-11; ID 16-2011, f. & cert. ef. 10-31-11
836-100-0115
Waiver
(1) If a health insurer or health care entity
demonstrates that the insurer or entity is certified by the Council for
Affordable Quality Healthcare’s (CAQH) Committee on Operating Rules for
Information Exchange (CORE), the Director of the Department of Consumer and
Business Services shall grant a waiver from the requirement to comply with the
Oregon Companion Guide. A health insurer or health care entity granted a waiver
under this subsection shall be deemed in compliance with the standards of the
applicable Oregon Companion Guide.
(2) Until January 1, 2014, the Director of the
Department of Consumer and Business Services may grant a waiver to a health
insurer or health care entity subject to OAR 836-100-0110 that demonstrates
that the health insurer or health care entity is unable to comply with its
provisions, or for whom compliance would be an undue hardship. A health insurer
or health care entity requesting a waiver must submit a letter of need to the
director. If the health insurer or health care entity requires an extension of
the waiver, the health insurer or health care entity may apply to the Director
of the Department of Consumer and Business Services for a temporary waiver of
some or all of the provisions of the applicable Oregon Companion Guide. The
waiver request must:
(a) Specify the name of the Oregon Companion Guide for
which the waiver is requested;
(b) Indicate whether the waiver is for the entire
Oregon Companion Guide or for specific provisions in the Oregon Companion Guide
for which a waiver is requested.
(c) Explain the reasons the health insurer or health
care entity is unable to comply or for which compliance would cause undue
hardship, including systemic or structural impediments, financial hardship, and
any other factors the health insurer or health care entity believes pertinent
to the request.
(d) Specify the period of time for which the waiver is requested.
After January 1, 2014, an insurer or health care entity may not request a
waiver for a period longer than twelve months. An insurer or entity may request
a waiver for an additional twelve months as previous waivers lapse.
(e) Include the insurer’s or entity’s plan for coming
into compliance with the provisions of OAR 836-100-0110 during the time granted
by the waiver.
(3)(a) After considering a request for a waiver
submitted under section (1) of this rule, and at the director’s discretion, the
director may grant or deny the request.
(b) In considering whether to allow a waiver requested
pursuant to section (1) of this rule, the director shall consider the efforts
of the health insurer or health care entity to comply with federal requirements
contained in Section 1104 of the Patient Protection and Affordable Care Act.
(4) Information and standards related to CORE
certification are located at the CAQH website: http://www.caqh.org/benefits.php
Stat. Auth.: ORS 731.244 &
2011 OL Ch. 130 Sec. 2 (Enrolled SB 94)
Stats. Implemented: 2011 OL Ch.
130 Sec. 2 (Enrolled SB 94)
Hist.: ID 12-2011, f. & cert.
ef. 7-15-11; ID 16-2011, f. & cert. ef. 10-31-11
Rule
Caption: Allows use of 2001 CSO Preferred
Mortality Tables to be used for certain contracts.
Adm.
Order No.: ID 17-2011
Filed with Sec. of
State: 10-31-2011
Certified to be
Effective: 10-31-11
Notice Publication
Date: 9-1-2011
Rules Amended: 836-031-0810, 836-031-0815
Subject: The amendments to these rules reflect changes to the
National Association of Insurance Commissioners (NAIC) Model Regulation #815.
The rules generally specify which mortality table is recognized for use in
determining minimum reserve liabilities. Adoption of these amendments to the
rules would allow a company to substitute the 2001 CSO Preferred Mortality
Tables in place of the 2001 CSO Smoker or Nonsmoker Mortality Tables for
policies issued prior to January 1, 2007. The conditions for use of the
preferred tables are also set out in the rules and the use does require the
consent of the director of the Department of Consumer and Business Services.
These changes are
necessary to maintain Oregon’s accreditation.
Rules Coordinator: Sue Munson—(503) 947-7272
836-031-0810
2001 CSO Preferred Class Structure
Table
(1) At the election of the insurer, for each calendar
year of issue, for any one or more specified plans of insurance and subject to
satisfying the conditions stated in OAR 836-031-0800 to 836-031-0815, the 2001
CSO Preferred Class Structure Mortality Table may be substituted in place of
the 2001 CSO Smoker or Nonsmoker Mortality Table as the minimum valuation
standard for policies issued on or after January 1, 2007. For policies issued
on or after January 1, 2004 (the date of adoption of OAR 836-051-0106, Life
Insurance Valuation and Nonforfeiture Standards), and prior to January 1, 2007,
the 2001 CSO Preferred Class Structure Mortality Tables may be substituted with
the consent of the director and subject to the conditions of OAR 836-031-0815.
In determining whether to consent to the substitution, the director may rely on
the consent of the Insurance Commissioner of the company’s state of domicile.
No such election may be made until the insurer demonstrates at least 20 percent
of the business to be valued on this table is in one or more of the preferred
classes. A table from the 2001 CSO Preferred Class Structure Mortality Table
used in place of a 2001 CSO Mortality Table, pursuant to the requirements of
OAR 836-031-0800 to 836-031-0815, will be treated as part of the 2001 CSO Mortality
Table only for purposes of reserve valuation pursuant to the requirements of
the NAIC model regulation “Recognition of the 2001 CSO Mortality Table For Use
in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits Model
Regulation.”
(2) Tables referenced in this rule are available from
the Insurance Division of the Department of Consumer and Business Services.
[ED. NOTE: Tables referenced are
available from the agency.]
Stat. Auth: ORS 731.244 &
733.306
Stats. Implemented: ORS 733.306
Hist.: ID 2-2007, f. & cert.
ef. 2-12-07; ID 17-2011, f. & cert. ef. 10-31-11
836-031-0815
Conditions
(1) For each plan of insurance with separate rates for
preferred and standard nonsmoker lives, an insurer may use the super preferred
nonsmoker, preferred nonsmoker, and residual standard nonsmoker tables to
substitute for the nonsmoker mortality table found in the 2001 CSO Mortality
Table to determine minimum reserves. At the time of election and annually
thereafter, except for business valued under the residual standard nonsmoker
table, the appointed actuary shall certify that:
(a) The present value of death benefits over the next
ten years after the valuation date, using the anticipated mortality experience
without recognition of mortality improvement beyond the valuation date for each
class, is less than the present value of death benefits using the valuation
basic table corresponding to the valuation table being used for that class;
(b) The present value of death benefits over the future
life of the contracts, using anticipated mortality experience without
recognition of mortality improvement beyond the valuation date for each class,
is less than the present value of death benefits using the valuation basic
table corresponding to the valuation table being used for that class.
(2) For each plan of insurance with separate rates for
preferred and standard smoker lives, an insurer may use the preferred smoker
and residual standard smoker tables to substitute for the smoker mortality
table found in the 2001 CSO Mortality Table to determine minimum reserves. At
the time of election and annually thereafter, for business valued under the
preferred smoker table, the appointed actuary shall certify that:
(a) The present value of death benefits over the next
ten years after the valuation date, using the anticipated mortality experience
without recognition of mortality improvement beyond the valuation date for each
class, is less than the present value of death benefits using the preferred
smoker valuation basic table corresponding to the valuation table being used
for that class;
(b) The present value of death benefits over the future
life of the contracts, using anticipated mortality experience without
recognition of mortality improvement beyond the valuation date for each class,
is less than the present value of death benefits using the preferred smoker
valuation basic table.
(3) Unless exempted by the Director, each authorized
insurer using the 2001 CSO Preferred Class structure Table shall annually file
with the Director, with the NAIC or with a statistical agent designated by the
NAIC and acceptable to the Director, statistical reports showing mortality an
such other information ask the Director may deem necessary or expedient for the
administration of the provisions of OAR 836-031-0800 to 836-031-0815. The form
of the reports shall be established by the Director or the Director may require
the use of a form established by the NAIC or by a statistical agent designated
by the NAIC and acceptable to the Director.
(4)(a) The use of the 2001 CSO Preferred Class
Structure Table for the valuation of policies issued prior to January 1, 2007
is not permitted in any statutory financial statement in which a company
reports, with respect to any policy or portion of a policy coinsured, either of
the following:
(A) In cases where the mode of payment of the
reinsurance premium is less frequent than the mode of payment of the policy
premium, a reserve credit that exceeds, by more than the amount specified in
the paragraph as Y, the gross reserve calculated before reinsurance. Y is the
amount of the gross reinsurance premium that:
(i) Provides coverage for the period from the next
policy premium due date to the earlier of the end of the policy year and the
next reinsurance premium due date; and
(ii) Would be refunded to the ceding entity upon the
termination of the policy.
(B) In cases where the mode of payment of the
reinsurance premium is more frequent than the mode of payment of the policy
premium, a reserve credit that is less than the gross reserve, calculated
before reinsurance, by an amount that is less than the amount specified in this
paragraph as Z. Z is the amount of the gross reinsurance premium that the
ceding entity would need to pay the assuming company to provide reinsurance
coverage from the period of the next reinsurance premium due date to the next
policy premium due date minus any liability established for the proportionate
amount not remitted to the reinsurer.
(b) A company may estimate and adjust its accounting on
an aggregate basis in order to meet the conditions to use the 2001 CSO
Preferred Class Structure Table. For purposes of this condition, but the
reserve credit and the gross reserve before reinsurance:
(A) For the mean reserve method defined as the mean
reserve minus the deferred premium asset; and
(B) For the mid-terminal reserve method which includes
the unearned premium reserve.
(5) Tables referenced in this rule are available from
the Insurance Division of the Department of Consumer and Business Services.
[ED. NOTE: Tables referenced are
available from the agency.]
Stat. Auth: ORS 731.244 &
733.306
Stats. Implemented: ORS 733.306
Hist.: ID 2-2007, f. & cert.
ef. 2-12-07; ID 17-2011, f. & cert. ef. 10-31-11
Notes
1.) This online version of the OREGON BULLETIN is provided for convenience of reference and enhanced access. The official, record copy of this publication is contained in the original Administrative Orders and Rulemaking Notices filed with the Secretary of State, Archives Division. Discrepancies, if any, are satisfied in favor of the original versions. Use the OAR Revision Cumulative Index found in the Oregon Bulletin to access a numerical list of rulemaking actions after November 15, 2010.
2.) Copyright 2011 Oregon Secretary of State: Terms and Conditions of Use |