Capital Adequacy (E) Task Force

Transcription

1 Capital Adequacy (E) Task Force RBC Proposal Form [ x ] Capital Adequacy (E) Task Force [ ] Health RBC (E) Working Group [ ] Life RBC (E) Working Group [ ] Catastrophe Risk (E) Subgroup [ ] Investment RBC (E) Working Group [ ] SMI RBC (E) Subgroup [ ] C3 Phase II/ AG43 (E/A) Subgroup [ ] P/C RBC (E) Working Group [ ] Stress Testing (E) Subgroup DATE: CONTACT PERSON: Crystal Brown TELEPHONE: ADDRESS: cbrown@naic.org ON BEHALF OF: Health RBC (E) Working Group NAME: Patrick McNaughton TITLE: Chief Financial Examiner/Chair AFFILIATION: WA Office of Insurance Commissioner ADDRESS: PO Box Olympia, WA FOR NAIC USE ONLY Agenda Item # CA (MOD) Year 2018 DISPOSITION [ ] ADOPTED [ ] REJECTED [ ] DEFERRED TO [ ] REFERRED TO OTHER NAIC GROUP [ ] EXPOSED [ ] OTHER (SPECIFY) IDENTIFICATION OF SOURCE AND FORM(S)/INSTRUCTIONS TO BE CHANGED [ x ] Health RBC Blanks [ x ] Property/Casualty RBC Blanks [ x ] Life RBC Instructions [ x ] Fraternal RBC Blanks [ x ] Health RBC Instructions [ x ] Property/Casualty RBC Instructions [ x ] Life RBC Blanks [ x ] Fraternal RBC Instructions [ x ] OTHER DESCRIPTION OF CHANGE(S) Add an electronic only table to pages XR014, LR019, FR019 and PR019 for the new Stop Loss Interrogatories. Add a second electronic only table to capture the number of stop loss contracts by group siz. REASON OR JUSTIFICATION FOR CHANGE The Health RBC Working Group adopted changes to the stop loss factors in 2017 and at that time the Working Group agreed to gather information and continue to review the factors with more current information. The addition of the interrogatories would allow for the additional information needed to continue the review of the factors. The interrogatories will be captured through an electronic only table and be used to collect data to review the stop loss factors for a period of time to be determined by the Working Group. The Working Group will aggregate individual company data and the Working Group will later work with the Academy to review the aggregated data. Minnesota requested that a second electronic only table be added to the proposal to capture stop loss contracts by group size, this would include the number of groups, average specific attachment point and average aggregate attachment. Additional Staff Comments: Because stop loss is reported in the health portion of each formula, it is suggested that the interrogatories be added to all lines of business (Health, Life, Fraternal and P/C) cgb The WG agreed to refer the proposal to the Capital Adequacy (E) Task Force to expose with the Minnesota revisions for a 30 day comment period ending Feb. 28, This section must be completed on all forms. Revised National Association of Insurance Commissioners

2 Stop Loss Electronic Only Tables XR014, PR019, LR019, FR019 Electronic Only Table Instructions The Health Risk-Based Capital (E) Working Group revised the stop loss factors in The American Academy of Actuaries submitted a report to the Health Risk-Based Capital (E) Working Group and suggested that the factors be revised based on data from The Health Risk- Based Capital (E) Working Group agreed to continue analyzing the stop loss factors as a result of the changes to life time maximum amounts included in the Federal Affordable Care Act. Electronic Table 1 Stop Loss Interrogatories The interrogatories are designed to gather the information by product type and will be reviewed on a go forward basis. The data will be used in the continued evaluation of the factors. The terms used in the interrogatories are defined as follows: Product Type Specific SL = Specific stop loss (including aggregating specific). This coverage was included in 1998 to 2008 Aggregate SL = Aggregate stop loss. This coverage was included in 1998 to 2008 HMO Re = specific reinsurance of an HMO s commercial, Medicare, Medicaid or Point of Service products. This coverage was not included in 1998 to 2008 PXS = specific excess written on Providers including IPAs, hospitals, clinics. This coverage was not included in 1998 to 2008 MXS = specific reinsurance of an insurance company s medical business (first dollar or self-insured). This coverage was not included in 1998 to 2008 Please do not include quota share or excess reinsurance written on Stop Loss business. Calendar Year - Submit experience information for the calendar year. Total Gross Premium - This is the gross premium revenue, before ceded reinsurance and including commissions. Report the data as reported in the annual statement and do not adjust for any anomalies in the experience. Total Incurred Claims - This is the gross incurred claims result, before ceded reinsurance. It is the sum of paid claims, change in reported claims reserves and change in IBNR (incurred but not reported reserves) for each Product Type shown. Please report the data as reported in your annual statement and do not adjust for any anomalies in the experience. Gross Loss Ratio - This is equal to Incurred Claims / Gross Premium. Premiums Net of Reinsurance This is the net premium revenue, net of reinsurance. Report data as reported in the annual statement and do not adjust for any anomalies in the experience.

3 Incurred Claims Net of Reinsurance This is the incurred claims net of reinsurance. It is the sum of paid claims, change in reported claims reserves and change in IBNR (incurred but not reported reserves) for each Product Type shown. Please report the data as reported in the annual statement and do not adjust for any anomalies in the experience. Loss Ratio Net of Reinsurance This is equal to Incurred Claims Net of Reinsurance/Premiums Net of Reinsurance. Expected Loss Ratio - This is equal to your current pricing target loss ratio for each Product Type listed. This will be used to normalize your experience results with other carriers' results. Target Profit Margin - This is equal to your current target profit margin for each Product Type listed, and will also be used to normalize your results with those from other carriers. We are defining Profit Margin to be: 100% less Expected Loss Ratio less Operating Expense Ratio. Maximum Retained (Specific Only)1 - This is maximum retained claim amount per individual for Specific coverage. The company should indicate if this claim amount includes claims which count toward the Specific deductible (includes), or are claims in excess of the Specific deductible (excess). For example, if the company reports $1,000,000, it could mean the company's liability is from the Specific deductible to $1,000,000 (includes) or the company's liability is the first $1,000,000 of claims in excess of the Specific deductible (excess). This information is new information that will be reviewed. Under the Affordable Care Act there is no annual or lifetime maximum. This is meant to capture whether gross loss ratio variability is partially due to maximum company liability (even though the RBC factors apply to gross premiums and claims). Line 10 Enter an I for Included and an E for Excess. 1 Should this be Specific only, or should it be included in the other categories.

4 Page XR014 Reinsurance Reinsurance Reinsurance - specific reinsurance of an insurance company's medical business (first dollar or self-insured). Please do not include quota share or excess reinsurance written on Stop Loss business Page XR014 Attachment Point ($) Attachment (%) The average should be weighted by covered lives in the respective group size bracket, excluding the cound of covered lives

5 Page PR019 Reinsurance Reinsurance Reinsurance - specific reinsurance of an insurance company's medical business (first dollar or self-insured). Please do not include quota share or excess reinsurance written on Stop Loss business Page PR019 Attachment Point ($) Attachment (%) The average should be weighted by covered lives in the respective group size bracket, excluding the cound of covered lives

6 Page LR019 Reinsurance Reinsurance Reinsurance - specific reinsurance of an insurance company's medical business (first dollar or self-insured). Please do not include quota share or excess reinsurance written on Stop Loss business Page LR019 Attachment Point ($) Attachment (%) The average should be weighted by covered lives in the respective group size bracket, excluding the cound of covered lives

7 Page FR019 Reinsurance Reinsurance Reinsurance - specific reinsurance of an insurance company's medical business (first dollar or self-insured). Please do not include quota share or excess reinsurance written on Stop Loss business Page FR019 Attachment Point ($) Attachment (%) The average should be weighted by covered lives in the respective group size bracket, excluding the cound of covered lives