Ins 3.13 HistoryHistory: Cr. Register, March, 1958, No. 27; subsections (1), (5), (6) eff. 4-1-58; subsections (2), (3), (4) eff. 5-15-58; am. (2) (c) and cr. (4) (c), Register, March, 1959, No. 39, eff. 4-1-59; am. (2) (e), (6) (b) 3. and 4., Register, November, 1959, No. 47, eff. 12-1-59; am. and renum. (2) (c), (d), (e), (f), (g) and (h); am. (3) and (6) (b) 5., Register, June, 1960, No. 54, eff. 7-1-60; am. (2) (e) 4., Register, November, 1960, No. 59, eff. 12-1-60; r. (2) (j), Register, April, 1963, No. 88, eff. 5-1-63; cr. (2) (j), Register, March, 1964, No. 99, eff. 4-1-64; am. (2) (e) 2. and 4., Register, April, 1964, No. 100, eff. 5-1-64; am. (2) (j) 2.; am. NOTE in (2) (j) 3; Register, March, 1969, No. 159; eff. 4-1-69; cr. (2) (k), Register, June, 1971, No. 186, eff. 7-1-71; am. (4) (a), Register, February, 1974, No. 218, eff. 3-1-74; emerg. am. (1), (2) (e) 7., (2) (j), (3) (a) and (c), eff. 6-22-76; am. (1), (2) (e) 7., (2) (j), (3) (a) and (c), Register, September, 1976, No. 249, eff. 10-1-76; am. (1) and (2) (e) 7, Register, March, 1979, No. 279, eff. 4-1-79; r. (5), Register, January, 1980, No. 289, eff. 2-1-80; am. (2) (j) 3., Register, June, 1982, No. 318, eff. 7-1-82; emerg. am. (2) (j) and cr. (2) (jm), eff. 11-19-85; am. (2) (j) (intro.) and cr. (2) (jm), Register, March, 1986, No. 363, eff. 4-1-86; am. (1), Register, September, 1986, No. 369, eff. 10-1-86; emerg. am. (2) (j) (intro.), renum. (2) (jm) to be Ins 3.39 (7) (d), eff. 1-1-92; am. (2) (j) (intro.), renum. (2) (jm) to be Ins 3.39 (7) (d), Register, July, 1992, No. 439, eff. 8-1-92; correction in (1) made under s. 13.93 (2m) (b) 7., Stats., Register, January, 1999, No. 517; CR 08-112: am. (2) (j) 3. Register June 2009 No. 642, eff. 7-1-09; CR 19-036: am. (2) (j) (intro.), 3. Register December 2019 No. 768, eff. 1-1-20. Ins 3.14Ins 3.14 Group accident and sickness insurance. Ins 3.14(1)(1) Purpose. This rule implements and interprets applicable statutes for the purpose of establishing procedures and requirements to expedite the review and approval of group accident and sickness policies permitted by s. 600.03 (23), Stats., and s. Ins 6.75 (1) (c) or (2) (c). Ins 3.14(3)(3) Rate filings. Schedules of premium rates shall be filed in accordance with the requirements of ch. 601, Stats., and s. 631.20, Stats. The schedules of premium rates shall bear the insurer’s name and shall identify the coverages to which such rates are applicable. Ins 3.14(4)(a)(a) Each certificate issued to an employee or member of an insured group in connection with a group insurance policy shall include a statement in summary form of the provisions of the group policy relative to: Ins 3.14(5)(a)(a) Policies issued in accordance with s. 600.03 (23), Stats., shall offer to insure all eligible members of the group or association except any as to whom evidence of insurability is not satisfactory to the insurer. Cancellation of coverage of individual members of the group or association who have not withdrawn participation nor received maximum benefits is not permitted, except that the insurer may terminate or refuse renewal of an individual member who attains a specified age, retires or who ceases to actively engage in the duties of a profession or occupation on a full-time basis or ceases to be an active member of the association or labor union or an employee of the employer, or otherwise ceases to be an eligible member. Ins 3.14(5)(b)(b) Surgical benefit provisions or schedules shall provide that the benefit for any covered surgical procedure not specifically listed in the schedule and not excluded by the provisions of the policy shall be determined by the company on a basis consistent with the benefit provided for a comparable listed procedure. Ins 3.14(5)(c)(c) A policy which contains any provision under which the claimant may elect one benefit in lieu of another shall not limit to a specified period the time within which election may be made. Ins 3.14(6)(a)(a) The members of the board of directors of a corporation are eligible to be covered under a group accident and sickness policy issued to such corporation, Ins 3.14(6)(b)(b) The individual members of member organizations of an association, as defined in s. 600.03 (23), Stats., are eligible to be covered under a group accident and sickness policy issued to such association insuring employees of such association and employees of member organizations of such association, and Ins 3.14(6)(c)(c) The individuals supplying raw materials to a single processing plant and the employees of such processing plant are eligible to be covered under a group accident and sickness policy issued to such processing plant. Ins 3.14 HistoryHistory: Cr. Register, March, 1958, No. 27; subsections (1), (2), (3), eff. 4-1-58; subsections (4), (5), eff. 5-1-58; renum. (5) to be (5) (a); cr. (5) (b), Register, November, 1959, No. 47, eff. 12-1-59; am. (1) (3), (5) (a) and cr. (6), Register, October, 1961, No. 70, eff. 11-1-61; am. (6), Register, February, 1962, No. 74, eff. 3-1-62; cr. (5) (c), Register, June, 1971, No. 186, eff. 7-1-71; emerg. am. (1), (3), (5) (a), (6) (intro.) and (6) (b), eff. 6-22-76; am. (1), (3), (5) (a), (6) (intro.) and (6) (b), Register, September, 1976, No. 249, eff. 10-1-76; r. (2), Register, January, 1980, No. 289, eff. 2-1-80; am. (1), (5) (a), (6) (intro.) and (b), Register, September, 1986, No. 369, eff. 10-1-86; correction in (5) (a) made under s. 13.93 (2m) (b) 5., Stats., Register, April, 1992, No. 436. Ins 3.15Ins 3.15 Blanket accident and sickness insurance. Ins 3.15(1)(1) Purpose. This rule implements and interprets applicable statutes for the purpose of establishing procedures and requirements to expedite the review and approval of blanket accident and sickness policies permitted by s. 600.03 (4), Stats., and s. Ins 6.75 (1) (c) or (2) (c). Ins 3.15(3)(3) Rate filings. Schedules of premium rates shall be filed in accordance with the requirements of ch. 601, Stats., and s. 631.20, Stats. The schedules of premium rates shall bear the insurer’s name and shall identify the coverages to which such rates are applicable. Ins 3.15(4)(a)(a) In accordance with the provisions of s. 600.03 (4), Stats., the following are eligible for blanket accident and health insurance: Ins 3.15(4)(a)8.8. Cooperatives organized under ch. 185, Stats., on a membership basis without capital stock. Ins 3.15(4)(a)10.10. Members or members and advisors of fraternal organizations including women’s auxiliaries of such organizations and fraternal youth organizations. Ins 3.15(4)(b)(b) A company may submit any other risk or class of risks, subject to approval by the commissioner, which it believes is properly eligible for blanket accident and health insurance. Ins 3.15(5)(a)(a) Surgical benefit provisions or schedules shall provide that the benefit for any covered surgical procedure not specifically listed in the schedule and not excluded by the provisions of the policy shall be determined by the company on a basis consistent with the benefit provided for a comparable listed procedure. Ins 3.15(5)(b)(b) A policy which contains any provision under which the claimant may elect one benefit in lieu of another shall not limit to a specified period the time within which election may be made. Ins 3.15 HistoryHistory: Cr. Register, March, 1958, no. 27, eff. 4-1-58; am. (4) (a), cr. (5), Register, November, 1959, No. 47, eff. 12-1-59; am. (1), (3) and (4) (a), Register, October, 1961, No. 70, eff. 11-1-61; am. (4) (a), Register, April, 1963, No. 88, eff. 5-1-63; am. (4) (a), Register, June, 1963, No. 90, eff. 7-1-63; am. (4) (a), Register, October, 1963, No. 94, eff. 11-1-63; am. (4) (a), Register, August, 1964, No. 104, eff. 9-1-64; am. (4) (a), Register, August, 1968, No. 152, eff. 9-1-68; am. (4) (a), Register, March, 1969, No. 159, eff. 4-1-69; am. (4) (a), Register, August, 1970, No. 176, eff. 9-1-70; am. (4) (a), renum. (5) to be (5) (a), and cr. (b), Register, June, 1971, No. 186, eff. 7-1-71; emerg. am. (1), (3) and (4) (a), eff. 6-22-76; am. (1), (3) and (4) (a), Register, September, 1976, No. 249, eff. 10-1-76; r. (2), Register, January, 1980, No. 289, eff. 2-1-80; am. (1), Register, September, 1986, No. 369, eff. 10-1-86; corrections to (4) made under s. 13.93 (2m) (b) 5. and 7., Stats., Register, April, 1992, No. 436; CR 23-059: am. (4) (a) 15., cr. (4) (a) 16. Register June 2024 No. 822, eff. 7-1-24; correction in (4) (a) 1. to 15. made under s. 35.17, Stats., Register June 2024 No. 822. Ins 3.17Ins 3.17 Reserves for accident and sickness insurance policies. Ins 3.17(1)(1) Purpose. This section establishes required minimum standards under ch. 623, Stats., for claim, premium and contract reserves of insurers writing accident and sickness insurance policies. Ins 3.17(2)(2) Scope. This section applies to any insurer, including a fraternal benefit society, issuing a policy providing individual or group accident and sickness insurance coverages as classified under s. Ins 6.75 (1) (c) or (2) (c). This section does not apply to credit insurance as classified under s. Ins 6.75 (1) (c) 1. or (2) (c) 1. Ins 3.17(3)(a)(a) “Annual claim cost” means the net annual cost per unit of benefit before the addition of expenses, including claim settlement expenses, and a margin for profit or contingencies. Ins 3.17 NoteNote: For example, the annual claim cost for a $100 monthly disability benefit, for a maximum disability benefit period of one year, with an elimination period of one week, with respect to a male at age 35, in a certain occupation might be $12, while the gross premium for this benefit might be $18. The additional $6 would cover expenses and profit or contingencies.
Ins 3.17(3)(b)(b) “Claims accrued” means that portion of claims incurred on or prior to the valuation date which result in liability of the insurer for the payment of benefits for medical services which have been rendered on or prior to the valuation date, and for the payment of benefits for days of hospitalization and days of disability which have occurred on or prior to the valuation date, which the insurer has not paid as of the valuation date, but for which it is liable, and will have to pay after the valuation date. Ins 3.17 NoteNote: This liability is sometimes referred to as a liability for accrued benefits. A claim reserve, which represents an estimate of this accrued claim liability, must be established.
Ins 3.17(3)(c)(c) “Claims incurred” means a claim for which the insurer has become obligated to make payment, on or prior to the valuation date. Ins 3.17(3)(d)(d) “Claims reported” means those claims that have been incurred on or prior to the valuation date of which the insurer has been informed, on or prior to the valuation date. Ins 3.17 NoteNote: These claims are considered as reported claims for annual statement purposes.
Ins 3.17(3)(e)(e) “Claims unaccrued” means that portion of claims incurred on or prior to the valuation date which result in liability of the insurer for the payment of benefits for medical services expected to be rendered after the valuation date, and for benefits expected to be payable for days of hospitalization and days of disability occurring after the valuation date. Ins 3.17 NoteNote: This liability is sometimes referred to as a liability for unaccrued benefits. A claim reserve, which represents an estimate of the unaccrued claim payments expected to be made (which may or may not be discounted with interest), must be established.
Ins 3.17(3)(f)(f) “Claims unreported” means those claims that have been incurred on or prior to the valuation date of which the insurer has not been informed, on or prior to the valuation date. Ins 3.17 NoteNote: These claims are considered as unreported claims for annual statement purposes.
Ins 3.17(3)(g)(g) “Date of disablement” means the earliest date on which the insured is considered as being disabled under the definition of disability in the contract, based on a physician’s evaluation or other evidence. Ins 3.17(3)(h)(h) “Elimination period” means a specified number of days, weeks, or months starting at the beginning of each period of loss, during which no benefits are payable. Ins 3.17(3)(i)(i) “Gross premium” means the amount of premium charged by the insurer. It includes the net premium, based on claim cost, for the risk together with any loading for expenses, profit or contingencies. Ins 3.17(3)(k)(k) “Individual insurance” includes franchise insurance. Ins 3.17(3)(L)(L) “Level premium” means a premium calculated to remain unchanged throughout either the lifetime of the policy, or for some shorter projected period of years. Ins 3.17 NoteNote: The level premium need not be guaranteed; in which case, although it is calculated to remain level, it may be changed if any of the assumptions on which it was based are revised at a later time.
Ins 3.17 NoteGenerally, the annual claim costs are expected to increase each year and the insurer, instead of charging premiums that correspondingly increase each year, charges a premium calculated to remain level for a period of years or for the lifetime of the contract. In this case the benefit portion of the premium is more than needed to provide for the cost of benefits during the earlier years of the policy and less than the actual cost in the later years. The building of a prospective contract reserve is a natural result of level premiums.
Ins 3.17(3)(m)(m) “Modal premium” means the premium paid on a contract based on a premium term which could be annual, semiannual, quarterly, monthly, or weekly. Ins 3.17 NoteNote: Thus if the annual premium is $100 and if, instead, monthly premiums of $9 are paid then the modal premium is $9.
Ins 3.17(3)(n)(n) “Negative reserve” means a negative terminal reserve value due to the values of the benefits decreasing with advancing age or duration. Ins 3.17(3)(o)(o) “Preliminary term reserve method” means the method of valuation under which the valuation net premium for each year falling within the preliminary term period is exactly sufficient to cover the expected incurred claims of that year, so that the terminal reserve will be zero at the end of the year. As of the end of the preliminary term period, a new constant valuation net premium, or stream of changing valuation premiums, becomes applicable such that the present value of all such premiums is equal to the present value of all claims expected to be incurred following the end of the preliminary term period. Ins 3.17(3)(p)(p) “Present value of amounts not yet due on claims” means the reserve for claims unaccrued which may be discounted at interest. Ins 3.17(3)(q)(q) “Reserve” includes all items of benefit liability, whether in the nature of incurred claim liability or in the nature of contract liability relating to future periods of coverage, and whether the liability is accrued or unaccrued. Ins 3.17 NoteNote: An insurer under its contracts promises benefits which result in:
Ins 3.17 NoteOn claims incurred, payments expected to be made after the valuation date for accrued and unaccrued benefits are liabilities of the insurer which should be provided for by establishing claim reserves; or
Ins 3.17 NoteClaims which are expected to be incurred after the valuation date. Any present liability of the insurer for these future claims should be provided for by the establishment of contract reserves and unearned premium reserves.
Ins 3.17(3)(r)(r) “Terminal reserve” means the reserve at the end of the contract year which is the present value of benefits expected to be incurred after that contract year minus the present value of future valuation net premiums. Ins 3.17(3)(s)(s) “Unearned premium reserve” means that portion of the premium paid or due to the insurer which is applicable to the period of coverage extending beyond the valuation date. Ins 3.17 NoteNote: Thus if an annual premium of $120 was paid on November 1, $20 would be earned as of December 31 and the remaining $100 would be unearned. The unearned premium reserve could be on a gross basis as in this example, or on a valuation net premium basis.
Ins 3.17(3)(t)(t) “Valuation net modal premium” means the modal fraction of the valuation net annual premium that corresponds to the gross modal premium in effect on any contract to which contract reserves apply. Thus if the mode of payment in effect is quarterly, the valuation net modal premium is the quarterly equivalent of the valuation net annual premium. Ins 3.17(4)(4) Reserves in excess of minimum reserve standards. An insurer subject to this section may determine that the adequacy of its accident and sickness reserves requires reserves in excess of the minimum standards specified in this section. The insurer shall hold and consider the excess reserves as its minimum reserves. Ins 3.17(5)(a)(a) With respect to any block of contracts, or with respect to an insurer’s accident and sickness business as a whole, a prospective gross premium valuation is the ultimate test of reserve adequacy as of a given valuation date. The gross premium valuation shall take into account, for contracts in force, in a claims status, or in a continuation of benefits status on the valuation date, the present value as of the valuation date adjusted for future premium increases reasonably expected to be put into effect, of: Ins 3.17(5)(b)(b) The insurer shall perform a gross premium valuation whenever a significant doubt exists as to reserve adequacy with respect to any major block of contracts, or with respect to the insurer’s accident and sickness business as a whole. In the event inadequacy is found to exist, the insurer shall make immediate loss recognition and restore the reserves to adequacy. The insurer shall hold adequate reserves, inclusive of claim, premium and contract reserves, if any, with respect to all contracts, regardless of whether contract reserves are required for the contracts under these standards.
