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Rule 20:06:21:64 Premium rate schedule increase requirements.

          20:06:21:64.  Premium rate schedule increase requirements. All premium rate schedule increases shall be determined in accordance with the following requirements:

          (1)  Exceptional increases shall provide that 70 percent of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits;

          (2)  Premium rate schedule increases shall be calculated such that the sum of the accumulated value of incurred claims, without the inclusion of active life reserves, and the present value of future projected incurred claims, without the inclusion of active life reserves, will not be less than the sum of the following:

               (a)  The accumulated value of the initial earned premium times 58 percent;

               (b)  Eighty-five percent of the accumulated value of prior premium rate schedule increases on an earned basis;

               (c)  The present value of future projected initial earned premiums times 58 percent; and

               (d)  Eighty-five percent of the present value of future projected premiums not in subdivision (2)(c) of this section on an earned basis;

          (3)  In the event that a policy form has both exceptional and other increases, the values in subdivision (2)(b) and (d) of this section will also include 70 percent for exceptional rate increase amounts; and

          (4)  All present and accumulated values used to determine rate increases shall use the maximum valuation interest rate for contract reserves as specified in SDCL 58-26-71 and 58-26-75. The actuary shall disclose as part of the actuarial memorandum the use of any appropriate averages.

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

          General Authority: SDCL 58-17B-4.

          Law Implemented: SDCL 58-17B-4.


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