•
Disclosing the rationale for the approach chosen.
For these blocks that crossed over from the loss ratio regulation to the rate stability regulation, the rate stability certification and/or defining moderately adverse experience may not have been completed as of the effective date of rate stability regulation. The actuary, together with the company management, may consider defining the original profit expectations and moderately adverse experience based on expectations at the time of (a) the effective date of rate stability regulation or (b) the rate increase.
What considerations may arise relative to the monitoring requirement if the full single in-force premium rate increase needed is not implemented? For each rate increase that is implemented, Section 20.D. of the model regulation requires that the insurer shall “file for review [approval] by the commissioner updated projections, as defined in Subsection B (3)(a), annually for the next three (3) years and include a comparison of actual results to projected values…” If the full single rate increase is not implemented, the actuary may consider: •
Treating the approval for a tiered rate increase (e.g., X percent in the current year, additional Y percent in one year) as (a) one increase and providing the required information for three years or (b) multiple increases and providing the required information for three years after implementing each.
•
Providing the required information after implementing each rate increase if the company requests additional rate increases until the full increase is implemented, for a minimum of three years, and/or using the rate increase filing(s) as the required information. Once the full amount is implemented or the company decides no longer to request additional increases, providing the required information for up to three additional years.
•
Revising the original projected values to reflect the implemented (versus requested) rate increase for comparison with actual values.
•
Disclosing to the DOI the company’s plan relative the monitoring requirement.
Some approaches may not be acceptable in all jurisdictions.
American Academy of Actuaries
26
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