General Assembly Raised Bill No. 5479
February Session, 2012 LCO No. 1816
*01816_______HS_*
Referred to Committee on Human Services
Introduced by:
(HS)
General Assembly
Raised Bill No. 5479
February Session, 2012
LCO No. 1816
*01816_______HS_*
Referred to Committee on Human Services
Introduced by:
(HS)
AN ACT CONCERNING ACCOUNTABILITY OF INSURERS TO CONSUMERS.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. Section 38a-481 of the 2012 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2012):
(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] Insurance 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 ensure 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.
(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] that 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] 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] 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, in compliance with the accounting procedures set forth by the recommendations of the National Association of Insurance Commissioners for reporting of medical loss ratios 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, but in no case shall be less than eighty-five per cent, unless, if the entity is a nonprofit corporation, not-for-profit corporation, mutual insurance corporation or federally qualified cooperative insurer, the medical loss ratio shall conform with governing federal laws and regulations. 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. Administrative and medical expenses, for the purposes of calculating the medical loss ratio, will be defined by the current recommendation of the National Association of Insurance Commissioners, as used in the Affordable Care Act, which encompasses the Patient Protection and Affordable Care Act, Public Law 111-148, as amended by The Health Care and Education Reconciliation Act of 2010, Public Law 111-152;
(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] 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] 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) The commissioner has the authority to perform an audit of any insurer. If the audit shows that an insurer has violated any provision of this section, the insurer shall be subject to penalties and fines up to and exceeding one million dollars, depending on the severity of the violation. An insurer aggrieved because of a penalty levied under this subdivision may appeal therefrom in accordance with the provisions of section 38a-19.
[(f)] (g) 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)] (h) Nothing in this chapter shall preclude the issuance of an individual health insurance policy [which] that includes an optional life insurance rider, provided the optional life insurance rider [must] shall be filed with and approved by the [Insurance Commissioner] 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)] (i) No insurance company, fraternal benefit society, hospital service corporation, medical service corporation, health care center or other entity that delivers, issues for delivery, amends, renews or continues an individual health insurance policy in this state shall: (1) Move an insured individual from a standard underwriting classification to a substandard underwriting classification after the policy is issued; (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; or (3) use an individual's history of taking a prescription drug for anxiety for six months or less as a factor in its underwriting unless such history arises directly from a medical diagnosis of an underlying condition.
This act shall take effect as follows and shall amend the following sections:
Section 1 July 1, 2012 38a-481
This act shall take effect as follows and shall amend the following sections:
Section 1
July 1, 2012
38a-481
Statement of Purpose:
To strengthen insurer accountability and enhance consumer protection.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]