Module 11 Flashcards
Contract provision
limiting changes to
premium rates
Rate guarantee
Rates to support projected claims charges and expenses based on experience analysis of the group’s most current experience
renewal rates
A renewal process that beings with measuring current premium levels against projected claims charges
experience analysis
A type of contract that allows for annual review and also has provisions permitting both the plan sponsor and insurer to cancel coverage
renewable term contract
A contract provision related to plan sponsor size that allows an insurer to cancel a contract
minumum group size
Plan member demographic information required by an insurer from the plan sponsor
renewal data
One way that
demographics impact
a group’s manual
rates
claiming patterns
For fully pooled plans,
which claims
experience during the
past year is used?
claims experience of total pool
For groups underwritten on any basis other than fully pooled, which claims experience during the past year is used?
claims experience of the group
The ratio of paid
claims to billed
premiums for any
given period
cash loss ratio or paid claims loss ratio
A position resulting
when the incurred loss
ratio equals the target
loss ratio
breakeven position
The result of dividing the incurred claims charge loss ratio by one minus the projected retention charge
experience adjusment
A premium rate that is a combination of the required experience rate and the required manual rate, as determined by the group’s credibility factor
blended premium rate
For a refundaccounted group, the financial position of the plan at the end of the contract period
premium surplus or deficit during accounting period
Paid premiums –
claims charges –
retention + interest =
year end balance
Cash or paid claims less any claims exceeding pooling level, changes in reserves, pool charges, conversion charges
claims charges
General administration and claims settlement charges, risk and profit charges, pool charges, premium tax, commissions
retention charges
Interest on reserves
and cash flow
interest credit or charge
An arrangement where accounting of claims is delayed for 1- 2 months so that actual claims incurred, but unpaid, are more accurately reflected in the appropriate plan year
delayed accounting arrangement
The use of surplus produced by one benefit to offset a deficit produced under another benefit
cross rating
A fund established by the insurer from plan surpluses for the purpose of offsetting a deficit
claims fluctuation reserve CFR
Arrangement that allows plan sponsor to pay discounted renewal rates with the requirement that additional amounts must be paid at end of the policy year if the paid premium is insufficient
retrospective premium arrangement
