96-04: Actuarial Certification

* This bulletin was repealed by 08-05

To:           All Insurance Companies Writing Health Insurance

From:      Jay Angoff, Director

Re:          Actuarial Certification

Date:       August 5, 1996

Now that the "Small Employer Health Insurance Availability Act" has become fully operational, the Missouri Department of Insurance is in the process of reviewing its procedures to see where any improvements might be made. One such area is the actuarial certification prescribed by Section 379.936.5(2), RSMo 1994. As you will recall, Section 379.936.5(2) provides that:

Each small employer carrier shall file with the director annually on or before March fifteenth an actuarial certification certifying that the carrier is in compliance with sections 379.930 to 379.952 and that the rating methods of the small employer carrier are actuarially sound. Such certification shall be in a form and manner, and shall contain such information, as specified by the director. A copy of the certification shall be retained by the small employer carrier at its principal place of business. (emphasis added)

In the actuarial certifications filed thus far, the Department has noticed a wide variation in their content. Some of the certifications, especially those that are qualified, will require us to request additional information in order to fully understand what is actually being certified. Accordingly, we have determined that a more standardized format would be of benefit to both small employer carriers and the Department.

In developing the standardized format, we will be reviewing the following: (l) certifications currently on file; (2) the Actuarial Standards Board Exposure Draft entitled "Certification for Small Employer Health Benefit Plans" (as well as any interim updates and the final standard); (3) the American Academy of Actuaries Small Group Certification Health Practice Note; and (4) any materials created by the NAIC. In addition, we will be contacting some small employer carriers with questions regarding their current actuarial certifications to help us better understand the certifications already on file. From this information, we will develop a draft certification form that will be sent to all small employer carriers for completion and return to us. Although we will be asking carriers to use 1995 data to complete the draft, it will not replace any 1995 certification previously filed.

We will review the completed draft certifications in an effort to develop a final format. During the course of our review, we may contact some carriers regarding their completed forms in order to better understand any problems encountered in completing the draft. Since we will probably not be able to contact each carrier, however, please do not assume that your form was properly completed just because you were not contacted. The final format should be available in time for the 1996 certification.

We will appreciate your cooperation and assistance as we work our way through this project. If you have any questions, please feel free to contact the Department's Health Actuary, Craig Kalman, at (573) 751-1389.