The DEPARTMENT OF FINANCIAL AND PROFESSIONAL REGULATION adopted an emergency rule in a new Part titled "Supplemental Reports for Accident and Health Insurers" (50 Ill Adm Code 937; 31 Ill Reg 10699), effective 7/12/07, which requires health insurance firms to report certain data quarterly. An identical proposed rulemaking appears in this week's Illinois Register at 31 Ill Reg 10546.

Beginning on 9/30/07, insurance companies must report gross quarterly premium statements and enrollment data, direct losses incurred, the company's loss ratio, and the number of primary insured persons and dependents the company covers. The reporting requirements apply to comprehensive major medical, accident, dental, disability, vision, Medicare supplemental, and other types of policies. An annual compilation statement containing this quarterly data must also be submitted with the annual statement already required under the Illinois Insurance Code.

The DEPARTMENT OF FINANCIAL AND PROFESSIONAL REGULATION proposed amendments to "Minimum Standards of Individual Accident and Health Insurance" (50 Ill Adm Code 2007; 31 Ill Reg 10549) that, effective 7/1/08, cap rate increases by companies providing individual health insurance policies to Illinois residents. The rulemaking, designed to prevent "abusive rating practices" that cause individuals to lose coverage or be charged drastically higher premiums based on their own or others' medical or claim histories, applies to health insurance policies that individuals purchase directly from an insurance carrier. It does not apply to group health plans (including self-insured single or multiple employer groups) nor to other types of insurance such as accident only, disability, dental, vision, Medicare supplement, long-term care, or automobile medical payment coverage.

The rulemaking limits how much carriers may raise rates charged to each of its blocks of business (all individuals covered by the same plan). A rate charged to any block of business, after actuarial adjustments are made for the demographic characteristics of the individuals enrolled (e.g. age and gender) and the package of benefits offered, cannot exceed the rate charged to any other block of business by more than 20 percent. Factors related to demographic characteristics, or any other factors approved by the Director of DFPR's Division of Insurance, cannot be used to raise rates for any block of business by more than 30 percent. Rate adjustments applied to a single block of business cannot be based on the claim history or health status of its members or of any individual in that block. A company also cannot transfer an individual involuntarily into or out of a block of business. Rating limitations may be suspended by the Director for a specified period if the Director finds that such action is reasonable in light of the company's financial condition. When offering an individual health benefit plan to a prospective or current customer, a company must disclose the following information: what other plans the company offers, their prices and their availability to the individual; the extent to which an individual's premiums are determined or changed based upon demographic rating characteristics; the company's right to change rates and the factors other than claim history that affect such changes; provisions for renewal of policies; and any provisions regarding pre-existing conditions.

Companies must file an annual compliance certification by 3/15 of each calendar year that includes the lowest and highest annual premiums charged to each block of business and verifies that their rating methods are actuarially sound. Companies also must keep detailed documentation of their rating practices and methods on file and make such information available to the Director upon request. However, the Division of Insurance will treat such information as trade secrets and will not disclose it without the company's permission or without a court order. The rulemaking establishes a 3-year transition schedule for policies issued before the effective date of the amendments. During this period, percentage increases in premium rates charged to individuals for each new rating period will be limited, based on how much the company is raising rates overall or for similar blocks of business.

DFPR also proposed amendments to "Small Employer Carrier Actuarial Certification and Documentation Requirement" (50 Ill Adm Code 5101; 31 Ill Reg 10557) expanding an annual certification filing required of insurance carriers for small employers under the Small Employer Health Insurance Rating Act. Insurance companies will be required to report, effective 1/1/08, rate data for each class of business in their annual certification, along with the lowest actual premium rate and highest annual premium rate for each class of business.