How does the Division of Insurance decide whether to approve a requested rate increase?
When a carrier requests a rate increase, the Division looks at many factors, including the cost of medical care and prescription drugs, the company’s past history of rate changes, the financial strength of the company, actual and projected claims, premiums, administrative costs, and profit. The Division approves the request if the carrier can show that the new rate is reasonable in relation to the benefits provided. If the carrier’s data does not fully support the increase, the Division can ask for more information, approve a smaller increase, or reject an increase. In 2008, House Bill 1389 strengthened the Division’s rate review process to help better protect consumers.
