(1) The "expected loss ratio" is a prospective calculation and shall be calculated as the projected "benefits incurred" divided by the projected "premiums earned" and shall be based on the actuary's best projections of the future experience within the "calculating period."
(2) The "actual loss ratio" is a retrospective calculation and shall be calculated as the "benefits incurred" divided by the "premiums earned," both measured from the beginning of the "calculating period" to the date of the loss ratio calculations.
(3) The "overall loss ratio" shall be calculated as the "benefits incurred" divided by the "premiums earned" over the entire "calculating period" and may involve both retrospective and prospective data.
(4) The "calculating period" shall be the time span over which the actuary expects the premium rates, whether level or increasing, to remain adequate in accordance with his best estimate of future experience and during which the actuary does not expect to request a rate increase.
(5) The "benefits incurred" shall be the "claims incurred" plus any increase (or less any decrease) in the "reserves."
(6) The "claims incurred" shall mean:
(a) Claims paid during the accounting period; plus
(b) The change in the liability for claims which have been reported but not paid; plus
(c) The change in the liability for claims which have not been reported but which may reasonably be expected.
The "claims incurred" shall not include expenses incurred in processing the claims, home office or field overhead, acquisition and selling costs, taxes or other expenses, contributions to surplus, or profit.
(7) The "reserves," as referred to in this regulation, shall include:
(a) Active life disability reserves;
(b) Additional reserves whether for a specific liability purpose or not;
(c) Contingency reserves;
(d) Reserves for select morbidity experience; and
(e) Increased reserves which may be required by the commissioner.
(8) The "premiums earned" shall mean the premiums, less experience credits, refunds or dividends, applicable to an accounting period whether received before, during or after such period.
(9) Renewal provisions are defined as follows:
(a) "Guaranteed renewable"—Renewal cannot be declined by the insurance company for any reason, but the insurance company can revise rates on a class basis.
(b) "Noncancellable"—Renewal cannot be declined nor can rates be revised by the insurance company.