11 NCAC 22 .0116. DEFINITIONS AND CERTIFICATION OF RATES FILING

(a)  For purposes of this Chapter, the following terms have the meanings ascribed to them:

(1)           "Rates are adequate" for a given block of policies or certificates means that the total payments collected now and in the future by the trust plus the investment earnings attributable to any net retained funds should be at least sufficient to fund the current and future benefits promised plus cover related expenses.

(2)           "Block of plans" means all coverage plans or certificates issued by the trust under the same schedule of rates and on the same plan document or form.

(3)           "Rates are not excessive" for a given block of plans means that the most recent calendar year incurred loss ratio is greater than or equal to one minus the expense ratio for that given block of policies or certificates.

(4)           "Expense ratio" means the ratio of the trust's operating expenses for a block of plans or certificates to its earned premium for that block of plans or certificates.

(5)           "Operating expense" means any combination of the following expenses:

(A)          Commissions;

(B)          Other acquisitions;

(C)          General administration;

(D)          Taxes, licenses, and fees; and

(E)           Profit and contingency margin.

(6)           Rates are not "unfairly discriminatory" if they reflect equitably differences in expected risk.

(b)  Every year each trust shall file the following actuarial certification executed by a qualified actuary in the following manner:

"I (Name of Qualified Actuary) am a qualified actuary as defined in 11 NCAC 22 .0115 and I certify that the rates developed for the trust of (Name of PEO) are calculated in an actuarially sound manner and that these rates are adequate, not excessive, and not unfairly discriminatory."

 

History Note:        Authority G.S. 58‑2‑40; 58‑89A‑15; 58-89A-105; 58‑89A-106;

Eff. April 1, 2010.