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Bill Number: 333 Ratification Number: 144 Act Number 90 Introducing Body: Senate Subject: Approval of policies and rates, and reasonableness of benefits
(A90, R144, S333)
AN ACT TO AMEND SECTION 38-71-310, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO APPROVAL OF ACCIDENT, HEALTH, OR ACCIDENT AND HEALTH INSURANCE POLICIES ISSUED OR DELIVERED IN THIS STATE, SO AS TO REVISE THE MANNER IN WHICH POLICIES AND PREMIUM RATES FOR CERTAIN ACCIDENT AND HEALTH INSURANCE POLICIES ARE APPROVED, AND TO PROVIDE THAT THE BENEFITS OF MAJOR MEDICAL INDIVIDUAL ACCIDENT AND HEALTH INSURANCE POLICIES ARE DEEMED REASONABLE UNDER CERTAIN CONDITIONS, AND TO AMEND THE 1976 CODE BY ADDING SECTION 38-71-315 SO AS TO PROVIDE FOR PROCEDURES TO BE FOLLOWED WHEN AN INSURER OF INDIVIDUAL ACCIDENT AND HEALTH INSURANCE VOLUNTARILY DECREASES ITS PREMIUM CHARGES.
Be it enacted by the General Assembly of the State of South Carolina:
Approval of policies and rates, and reasonableness of benefits
SECTION 1. Section 38-71-310 of the 1976 Code, as amended by an act of 1989 bearing Ratification Number 38, is further amended to read:
"Section 38-71-310. (A) No policy or certificate of accident, health, or accident and health insurance may be issued or delivered in this State, nor may any application, endorsement, or rider which becomes a part of the policy be used, until a copy of its form has been filed with and approved by the commissioner except as exempted by regulation as permitted by Section 38-61-20. The commissioner may disapprove the form if the form (1) does not meet the requirements of law, (2) contains any provisions which are unfair, deceptive, ambiguous, misleading, or unfairly discriminatory, or (3) is going to be solicited by means of advertising, communication, or dissemination of information which is deceptive or misleading. The commissioner shall notify in writing, as soon as is practicable, the insurer which has filed the form of his approval or disapproval. In the event of disapproval, the notice must contain the reasons for disapproval, and the insurer is entitled to a public hearing thereon. If no action has been taken to approve or disapprove a policy or certificate, application, endorsement, or rider after the documents have been filed for ninety days, they are deemed to be approved.
(B) No premium rates applicable to accident policies, health policies, or combined accident and health policies or certificates for individual or family protection may be used unless they have been filed with and approved by the commissioner. The commissioner may disapprove premium rates if he determines that the benefits provided in the policies or certificates are unreasonable in relation to the premiums charged. The commissioner shall notify in writing the insurer, as soon as is practicable, which has filed the premium rates of his approval or disapproval. In the event of disapproval, the notice must contain the reasons for disapproval, and the insurer is entitled to a public hearing on the disapproval. If no action has been taken to approve or disapprove the premium rates after they have been filed for ninety days, they are deemed to be approved.
(C) At any time the commissioner, after a public hearing of which at least thirty days' written notice has been given, may withdraw approval of forms or rates previously approved under subsections (A) and (B) if he determines that the forms or rates no longer meet the standards for approval specified in subsections (A) and (B).
(D) The provisions of this section do not apply to policies issued in connection with loans made under the Small Loan Act of 1966.
(E) For major medical expense coverage individual accident and health insurance policies, as defined by regulation of the commissioner, the benefits are deemed reasonable in relation to the premium charged if the insurer has filed a loss ratio guarantee with the commissioner. This guaranteed loss ratio must be equivalent to, or greater than, the most recent loss ratios detailed within the National Association of Insurance Commissioners' 'Guidelines for Filing of Rates for Individual Health Insurance Forms.' This loss ratio guarantee must be in writing and must contain at least the following:
(1) A recitation of the anticipated (target) loss ratio standards contained in the original actuarial memorandum filed with the policy form when it was originally approved.
(2) A guarantee that the actual South Carolina loss ratios for the calendar year in which the new rates take effect, and for each year thereafter until new rates are filed will meet or exceed the loss ratio standards referred to in item (1) above.
(3) A guarantee that the actual South Carolina loss ratio results for the year at issue will be independently audited at the insurer's expense. This audit must be done in the second quarter of the next year and the audited results must be reported to the commissioner not later than the date for filing the applicable Accident and Health Policy Experience Exhibit.
(4) A guarantee that affected South Carolina policyholders will be issued a proportional refund (based on premium paid) of the amount necessary to bring the actual aggregate loss ratio up to the anticipated loss ratio standards referred to in item (1) above. The refund must be made to all South Carolina policyholders insured under the applicable policy form as of the last day of the year at issue if the refund would equal five dollars or more. The refund must include statutory interest from the end of the year at issue until the date of payment. Payments must be made during the third quarter of the next year.
(5) As used herein, the term 'loss ratio' means the ratio of incurred losses to earned premium by number of years of policy duration, for all combined durations.
(6) The reference in item (1) of this subsection to the 'anticipated (target) loss ratio standards contained in the original actuarial memorandum filed with the policy form when it was originally approved' may not be considered or construed as evidence of legislative intent that the use of, or adherence to, such 'anticipated (target) loss ratio standards' is approved or disapproved in any application for a rate increase for any policy form approved prior to the effective date of these amendments to Section 38-71-310."
Decrease of premium charges
SECTION 2. The 1976 Code is amended by adding:
"Section 38-71-315. Any insurer of individual accident and health insurance may at any time, except when required by law or order of the commissioner, voluntarily decrease its premium charge for any approved policy form without the prior approval of the commissioner. However, the insurer must notify the commissioner and the consumer advocate for information thirty days prior to the use of the revised premium charge. Notwithstanding any other provision of law, any time within one year after using such revised premium charge, the insurer may return its premium charge back to the previously approved level by informing the commissioner and the consumer advocate of the revision thirty days prior to the effective date. The commissioner may not disapprove such revision."
SECTION 3. This act takes effect upon approval by the Governor.