31A-22-807 - Filing and approval of forms -- Loss ratio standards. - Utah Statutes

31A-22-807. Filing and approval of forms -- Loss ratio standards.
(1) A policy, certificate of insurance, statement of insurance, or endorsement formintended for use in Utah is subject to Section 31A-21-201.
(2) In addition to the grounds for prohibiting use of a form under Subsection31A-21-201(3), it is a ground to prohibit the use of a form that the benefits provided in the formare not reasonable in relation to the premium charge.
(3) (a) In ascertaining whether the benefits are reasonable in relation to the premiumcharged, the commissioner shall consider:
(i) the mortality cost of the life insurance;
(ii) the morbidity cost of the accident and health insurance; and
(iii) the reserves set up for the payment of claims unreported or in the process ofsettlement.
(b) For purposes of this section, benefits are considered reasonable in relation to thepremium charged if, given the costs described in this Subsection (3), the premium rate chargeddevelops or may reasonably be expected to develop a loss ratio of:
(i) not less than 50% for credit life insurance; and
(ii) not less than 55% for credit accident and health insurance.
(4) Benefits are considered reasonable in relation to premium charged if the ratio ofclaims incurred to premium earned during the most recent four-year period at the rates in useproduces a loss ratio that is equal to or exceeds the minimum loss ratio standard specified inSubsection (3).
(5) If the minimum loss ratio test produces a loss ratio that exceeds the minimum lossratio standard in Subsection (4) by five percentage points or more, the insurer may file forapproval and use a rate that is higher than the prima facie rate, if it can be expected that the useof the higher rate will continue to produce a loss ratio for an account to which it is applied thatwill satisfy the minimum loss ratio test.
(6) If the minimum loss ratio test produces a loss ratio that is lower than the minimumloss standard in Subsection (4) by five percentage points or more, the commissioner may requirethat the insurer:
(a) file an adjusted rate that can be expected to produce a loss ratio that will satisfy theminimum loss ratio test; or
(b) submit reasons acceptable to the commissioner why the insurer should not berequired to file an adjusted rate.

Amended by Chapter 345, 2008 General Session