Medigap Insurance: Insurers' Compliance with Federal Minimum Loss Ratio Standards, 1988-91 : Report to the Chairman, Subcommittee on Health, Committee on Ways and Means, House of Representatives, Issue 47

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Page 2 - Commissioners (NAIC) consists of the heads of the insurance departments of the 50 states, the District of Columbia, and 4 US territories. NAIC develops and adopts model laws and regulations that state insurance commissioners collectively believe are needed to regulate the insurance business.
Page 1 - Medigap Insurance: Insurers Whose Loss Ratios Did Not Meet Federal Minimum Standards in 1988-89 (Report, 2/28/92, GAO/HRD-92-54).
Page 1 - Congress has periodically passed legislation and conducted oversight hearings to improve the value of Medigap insurance to the elderly. One measure of the value of this insurance is the percentage of premiums returned to policyholders as benefits, which is called the loss ratio. For each year from 1988 through 1991, the federal minimum loss ratio standard for Medigap insurance was 75 percent for policies sold to groups and 60 percent for policies sold to individuals.3 These loss ratio standards are...
Page 2 - The premiums associated with companies whose aggregate loss ratios did not meet the federal minimum standards declined from $388 million in 1988 to $206 million in 1991. While this decline indicates that insurers...
Page 5 - From 1988 through 1989, Medigap insurers' aggregate11 loss ratios declined for both individual and group policies; that is, insurers returned a smaller percentage of premium dollars to policyholders in 1989 than in 1988. In 1990 and 1991, loss ratios gradually increased for both individual and group policies and for 1991 were approximately at their 1988 levels (see fig. 2 and app. I for details). Figure 2: Medigap Insurers...
Page 8 - Group Policies Note: Companies may sell both individual and group insurance and may have failed to meet the minimum standards in 1 or more years. The unduplicated count of companies is 59 for 1988. 46 for 1989, 31 for 1990, and 18 for 1991. For the 4 years, it is 104. We identified three companies whose loss ratios for their entire mature and credible Medigap business were below federal minimum standards throughout 1988-91. The National Security Life and Accident Insurance Company collected about...
Page 9 - premium" means earned premium, which is the amount of total premiums collected applicable to the calendar year for which a loss ratio is computed. For example, if a policy hol der paid an annual premium on June 1, only 7 months of that premium would be earned premium in that calendar year's loss ratio computation. Earned premiums include premiums due but uncollected in the current period. Also, benefits are 'incurred claims...
Page 10 - Act now requires states to evaluate their need standard at least once every 3 years and to report the results to HHS.
Page 8 - From 1988 through 1991, certain insurers' loss ratios were below the federal minimum standards in every state in which the company did business. The premiums collected by these companies declined from $126 million in 1988 to $35 million in 1991 (see fig. 4). (See app.
Page 30 - Experience Below the Minimum Standard for 1 or More Years During 1988-91...

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