How does the Maryland Insurance Administration decide whether to approve a requested rate change?
Health insurance companies must show that the requested premium rates follow Maryland law. Also, the requested premium rates must meet or exceed the State’s minimum loss ratio requirement. The loss ratio is the percentage of premium that is used to pay claims. The Maryland Insurance Administration does not approve the requested rates if they are:
• Excessive: Rates that are unreasonably high in relation to the benefits provided and the underlying risks;
• Inadequate: Rates that are unreasonably low in relation to the benefits provided and the underlying risks. If the rates are inadequate, the health plan may not be able to pay future claims; or
• Unfairly Discriminatory: Rates that are not applied consistently within a rating category. Rating categories can be defined by the following, among other things: policy form, age, gender, geographic area, family tier, or plan of benefits.