TO: Commercial Health Insurers, Blue Cross and Blue Shield of Massachusetts, Inc., and Health Maintenance Organizations
FROM: Julianne M. Bowler, Commissioner of Insurance
DATE: April 18, 2003
RE: Review of Accident and Sickness Rate Filings

The purpose of this bulletin is to remind insurance carriers that file accident and sickness insurance plans about the use of policy form checklists and to ensure they are aware of recent changes to 211 CMR 42.00 pdf format of 211 CMR 42.00 - THE FORM AND CONTENTS OF...
("The Form and Contents of Individual Accident and Sickness Insurance") that addresses product rate filings.

Mandatory Use of Policy Form Checklists

As noted in Bulletin 01-05, the Division of Insurance ("Division") requires that a completed checklist relevant to the policy forms submitted accompany all life, annuity, long-term care, and health insurance product filings. The checklists, which delineate statutory and regulatory requirements and prohibitions, are located on the Division's website at As stated in Bulletin 01-05, checklists must be completed in full indicating where in the insurance carrier's filing (page and paragraph number or section identifier) each requirement is addressed. In addition, each filing is to include a certification from a duly authorized representative of the insurance carrier that the forms submitted comply with applicable Massachusetts law as listed on the Division's website.

As noted in Bulletin 01-05, any product filing that is not accompanied by the applicable, completed checklist (with page and paragraph number or section identifier) and the appropriate certification of compliance will be rejected as incomplete and returned to the insurance carrier.

Review of Product Rate Filings

Following a public regulatory hearing, the Division promulgated changes to 211 CMR 42.00 pdf format of 211 CMR 42.00 - THE FORM AND CONTENTS OF...
, effective January 3, 2003, that affect all individual accident and sickness filings subject to the Division's review. According to the revisions made to 211 CMR 42 pdf format of 211 CMR 42.00 - THE FORM AND CONTENTS OF...
.06(3)(a), "[a]ll rate filings are subject to review by an actuary specified by the Commissioner whose costs will be paid by the company submitting the filing."

Commencing with all rate filings submitted to the Division on and after April 30, 2003, carriers will be required to submit those materials necessary for the Division to forward to an external actuary for review according to the requirements of 211 CMR 42 pdf format of 211 CMR 42.00 - THE FORM AND CONTENTS OF...
.06(3)(a). In order to ensure that an insurance carrier agrees to pay all the costs associated with the actuarial review of a rate filing, all submitted rate filings must include a document signed by the insurance carrier's Chief Financial Officer or officer authorized to guarantee payments certifying that the carrier will reimburse all actuarial expenses the Commissioner deems appropriate for the particular rate filing. The certification document must clearly state that the insurance carrier will pay the actuarial consultant within 30 days of receiving notice of the invoice from the Division or will add interest to the payment at the rate of 1-1/2 percent per month. Any Division approval of a submitted rate filing will be conditioned on the appropriate reimbursement being forwarded to the Division's consulting actuary. The product's rate filing will be considered incomplete without a signed certification.

In 2002, the Division created a pool of qualified actuarial consultants from those that contacted the Division to provide consulting work according to the specifications in RFR-2002-DOI-06 - "Request for Response for Proposal for Actuarial and Related Services." The Division subsequently contacted these actuarial consultants and developed a second pool that would agree to sign the attached commitment letter in order to participate in the rate review system created under 211 CMR 42 pdf format of 211 CMR 42.00 - THE FORM AND CONTENTS OF...
.06(3)(a). Each firm's response to RFR-2002-DOI-06, including the fees and expenses that would be associated with the actuarial review of individual accident and sickness filings, is on file at the Division and is available for public review.

Following the Division's receipt of a completed product rate filing, the Division will contact one of its actuarial consultants to review the product filing according to the timelines described in section 2 of the commitment letter. Following the return of a signed commitment letter, the actuarial consultant will be responsible to review the rate filing, but only after the actuarial consultant is notified that the Division has completed the review of any associated policy form materials.

In the course of reviewing an insurance carrier's rate filing, an actuarial consultant may notify an insurance carrier regarding the time and expenses associated with the actuarial review. In addition, at the request of the insurance carrier, the actuarial consultant may notify the carrier by electronic mail, no more frequently than weekly, regarding an estimate of the time and expenses associated with the actuarial review to date. If, at any time during the actuarial review, the insurance carrier wishes to terminate the review and pay the expenses incurred, the insurance carrier will be responsible to notify the Division that it wishes the particular filing to be withdrawn from further review. The Division will notify the actuarial consultant by electronic mail or regular mail of the request, and the actuarial consultant will discontinue the actuarial review. The insurance carrier will be responsible to pay all expenses incurred through the point when the actuarial consultant receives notification from the Division of its decision to withdraw the rate filing from further review by the Division.

Once the actuarial review is complete, the actuarial consultant will forward an invoice to the Division, along with a detailed accounting of the hours each individual worked on the rate filing. The invoice is subject to the Division's review and approval prior to forwarding to the carrier for payment. The Division will contact the carrier regarding the results of the actuarial review and will expect the actuarial expenses to be paid according to the terms of the carrier's certification document.

In establishing the noted process, it is the Division's intent to streamline the review of product filings and to establish review timelines for accident and sickness product filers. If you have any questions regarding this bulletin, please contact the Health Unit of the State Rating Bureau at 617-521-7347.

Actuarial Commitment Letter pdf format of bulletins_03_04_actuarial_letter.pdf