20:06:21:63.  Premium rate schedule increases -- Notice of pending increase. An insurer shall provide notice of a pending premium rate schedule increase, including an exceptional increase, to the director at least 30 days prior to the notice to the policyholders, and shall include:

          (1)  Information required by § 20:06:21:60;

          (2)  Certification by a qualified actuary that:

               (a)  If the requested premium rate schedule increase is implemented and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increases are anticipated;

               (b)  The premium rate filing is in compliance with the provisions of this section;

          (3)  An actuarial memorandum justifying the rate schedule change request that includes:

               (a)  Lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase; and the method and assumptions used in determining the projected values, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale;

                      (i)    Annual values for the five years preceding the three years following the valuation date shall be provided separately;

                      (ii)   The projections shall include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase;

                      (iii)  The projections shall demonstrate compliance with § 20:06:21:64; and

                      (iv)  For exceptional increases:

                           (I)   The projected experience must be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase; and

                           (II)  In the event the director determines as provided in § 20:06:21:70 that offsets may exist, the insurer shall use appropriate net projected experience;

               (b)  Disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse;

               (c)  Disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the company have been relied on by the actuary;

               (d)  A statement that policy design, underwriting, and claims adjudication practices have been taken into consideration; and

               (e)  In the event that it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, the insurer will need to file composite rates reflecting projections of new certificates;

          (4)  A statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the director; and

          (5)  Sufficient information for review and approval of the premium rate schedule increase by the director.

          Source: 28 SDR 157, effective May 19, 2002.

          General Authority: SDCL 58-17B-4.

          Law Implemented: SDCL 58-17B-4.