(1) The actuary responsible for setting premium rates must group similar policy forms, including forms no longer being marketed, in the pricing calculations.
(a) The grouping must be satisfactory to the commissioner, who may rely on the judgment of the pricing actuary.
(b) Factors that must be considered include similar claims experience, types of benefits, reserves, margins for contingencies, expenses and profit, and equity between policyholders.
(c) A grouping must enhance statistical reliability and improve the likelihood of premium adequacy without introducing elements of discrimination in violation of RCW 48.18.480
(d) A grouping is not required to include forms issued by health care service contractors or health maintenance organizations before January 1, 1988.
(2) Persons insured under similar policy forms must be grouped at the time of ratemaking in accord with RCW 48.18.480
because they are expected to have substantially like insuring, risk and exposure factors and expense elements.
(a) The morbidity and mortality experience of these insureds, as a group, will deteriorate over time.
(b) A form may not be withdrawn from its assigned grouping by reason only of the deteriorating health of the people insured thereunder, as provided for in RCW 48.83.170
(3) One or more of the policy forms grouped for ratemaking purposes, by random chance, may experience significantly higher or more frequent claims than the other forms. A form may not deviate from the assigned grouping of policy forms for pricing purposes at the time of requesting a rate increase unless the actuary can justify to the satisfaction of the commissioner that a different grouping is more equitable because of some previously unrecognized and nonrandom distinction between forms or between groups of insureds.
(4) Successive generic policy forms and policy forms of similar benefits covering generations of policyholders must be combined in the calculation of premium rates and loss ratios.