Medigap Insurance: Compliance With Federal Standards Has Increased
(Letter Report, 03/06/98, GAO/HEHS-98-66).
Pursuant to a legislative requirement, GAO reviewed insurers' compliance
with Medigap loss ratios and standards, focusing on: (1) the overall
Medigap market; (2) which Medigap policies had loss ratios below the
standards in 1994 and 1995; and (3) which policies resulted in refunds
or credits, or, if not, why.
GAO noted that: (1) from 1988 through 1995, the Medigap insurance market
grew from $7 billion to over $12 billion with most of the growth
occurring before 1993; (2) during this 8-year period, loss ratios
averaged 81 percent in 1995; (3) in 1994 and 1995, over 90 percent of
the policies in force for 3 years or more, representing most of the
premium dollars, met loss ratio standards; (4) premiums for policies
with loss ratios below standards totalled $448 million in 1994 and $203
million in 1995; (5) loss ratios varied substantially among states,
among different benefit packages, and among insurers; (6) although
thousands of individual policy forms had loss ratios below standards, no
refunds were required in 1994 and only two were required in 1995; (7)
the refund provision did not apply because most of these policies' loss
experience was based on too few policyholders to be considered credible
under the National Association of Insurance Commissioners' (NAIC) refund
calculation methodology; (8) a number of policies had a cumulative loss
ratio--the factor used to measure compliance--above that required under
NAIC's refund calculation method; and (9) a primary reason for requiring
refunds was to give insurers an incentive for meeting loss ratio
standards, and the high proportion of premium dollars for policies doing
so indicates the incentive is working.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: HEHS-98-66
TITLE: Medigap Insurance: Compliance With Federal Standards Has
Increased
DATE: 03/06/98
SUBJECT: Loss ratio
Insurance regulation
Health insurance cost control
Elderly persons
Insurance companies
Reporting requirements
Insurance premiums
IDENTIFIER: Medicare Program
Medigap
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Cover
================================================================ COVER
Report to the Secretary of Health and Human Services
March 1998
MEDIGAP INSURANCE - COMPLIANCE
WITH FEDERAL STANDARDS HAS
INCREASED
GAO/HEHS-98-66
Medigap Loss Ratios
(106438)
Abbreviations
=============================================================== ABBREV
AARP - American Association of Retired Persons
NAIC - National Association of Insurance Commissioners
OBRA - Omnibus Budget Reconciliation Act
Letter
=============================================================== LETTER
B-278866
March 6, 1998
The Honorable Donna E. Shalala
Secretary of Health and Human Services
Dear Madam Secretary:
Millions of Medicare beneficiaries depend on private insurance to
cover Medicare's deductibles and coinsurance and spent over $12
billion to purchase such insurance in 1995. In 1980, the Congress
established federal requirements for the sale and marketing of
insurance policies designed to supplement Medicare, commonly called
Medigap policies. The Congress acted in response to identified
marketing abuses and low benefit payouts and has since amended the
Medigap requirements several times to further protect consumers and
enhance the economic value of policies.
One area the law covers is required minimum loss ratios--the
percentage of premiums returned to policyholders as benefits--and
refunds or credits when loss ratios fall below standards that
currently stand at 65 percent for policies sold to individuals and 75
percent for policies sold to groups. The Congress stipulated that
states would continue to regulate Medigap policies as long as they
have standards that are equal to or more stringent than federal
standards. States that adopt the National Association of Insurance
Commissioners' (NAIC) model act and regulation meet this requirement.
We are required to report to the Secretary of Health and Human
Services and each state at least every 3 years on insurers'
compliance with loss ratios and standards. This is our second report
under this mandate.\1
Our objectives were to obtain information on the overall Medigap
market, determine which Medigap policies had loss ratios below the
standards in 1994 and 1995, and identify which policies resulted in
refunds or credits or, if not, why. We obtained NAIC computer files
for 1994 and 1995 that summarized loss ratio data for all Medigap
policies to determine those with loss ratios below the standards. We
tested the accuracy of NAIC's 1995 database by comparing its data
with information on a randomly selected sample of reports of Medigap
business prepared by insurers and filed with NAIC. Our verification
showed that NAIC accurately created the 1995 database. Neither we
nor NAIC verified the accuracy of the Medigap business reports.
Because the verification of databases for 1988 to 1993 yielded no
material discrepancies, we decided to only test the 1995 database.
We then contacted all the states, the District of Columbia, and
Puerto Rico to obtain information on policies that had refunds or
credits. We also obtained copies of the refund calculation forms
submitted to states by insurers for a sample of policies with loss
ratios below the standards to determine why insurers provided no
refunds or credits. We did our work from September 1996 to January
1998 in accordance with generally accepted government auditing
standards. (See app. I for additional details on our methodology.)
--------------------
\1 Our previous report was Medigap Insurance: Insurers' Compliance
With Federal Minimum Loss Ratio Standards, 1988-91 (GAO/HEHS-94-47,
Feb. 7, 1994).
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
From 1988 through 1995, the Medigap insurance market grew from $7
billion to over $12 billion with most of the growth occurring before
1993. During this 8-year period, loss ratios averaged 81 percent and
ranged from a low of 76 percent in 1993 to a high of 86 percent in
1995. In 1994 and 1995, over 90 percent of the policies in force for
3 years or more, representing most of the premium dollars, met loss
ratio standards. Premiums for policies with loss ratios below
standards totaled $448 million in 1994 and $203 million in 1995.
Loss ratios varied substantially among states, among different
benefit packages, and among insurers.
Although thousands of individual policy forms had loss ratios below
standards, no refunds were required in 1994 and only two were
required in 1995. The refund provision did not apply because most of
these policies' loss experience was based on too few policyholders to
be considered credible under NAIC's refund calculation methodology.
A number of policies had a cumulative loss ratio--the factor used to
measure compliance--above that required under NAIC's refund
calculation method. A primary reason for requiring refunds was to
give insurers an incentive for meeting loss ratio standards, and the
high proportion of premium dollars for policies doing so indicates
the incentive is working.
BACKGROUND
------------------------------------------------------------ Letter :2
Federal Medigap standards were first established by section 507 of
the Social Security Disability Amendments of 1980 (P.L. 96-265),
which added section 1882 to the Social Security Act (42 U.S.C. 1395
ss). Section 1882 set forth federal requirements that insurers must
meet for marketing policies as supplements to Medicare and
established criminal penalties for marketing abuses. As originally
enacted, one of the requirements was that policies had to be expected
to return specified portions of premiums as benefits--60 percent for
policies sold to individuals and 75 percent for those sold to groups.
Insurers were considered to have met the loss ratio requirement if
their actuarial estimates showed that their policies were expected to
do so. Actual loss ratios did not have to be compared with the loss
ratio standards. At that time, insurers generally reported loss
ratio data to the states in aggregate--that is, a combined total for
all policies sold in the state. If states had wanted to verify
compliance, this reporting method would not have allowed them to do
so for particular policies. In 1986, we reported\2 that section 1882
had helped protect against substandard and overpriced policies. We
also pointed out the problem of insurers reporting aggregate loss
ratio data and that actual loss ratios were not compared with the
standards to verify compliance.
Section 221 of the Medicare Catastrophic Coverage Act of 1988 (P.L.
100-360) amended section 1882 to require that insurers report their
actual loss ratios to the states. The Omnibus Budget Reconciliation
Act (OBRA) of 1990 (P.L. 101-508) required essentially that Medigap
policies be standardized and that a maximum of 10 different benefit
packages would be allowed. The act also increased the loss ratio
standard for individual policies to 65 percent for policies sold or
issued after November 5, 1991. Effective beginning in 1997, the
65-percent standard was applied to policies issued before November 6,
1991, by the Social Security Amendments of 1994 (P.L. 103-432).
The 1990 amendments also required that insurers pay refunds or
provide credits to policyholders when Medigap policies fail to meet
loss ratio standards. As implemented in the NAIC model law and
regulations, a cumulative 65-percent loss ratio for individual
policies (75-percent for group policies) must be met over the life of
a policy, which NAIC assumed to be 15 years. NAIC's methodology
compares a policy's actual loss ratio for a given year with a
benchmark (or target) ratio for that year, calculated using
cumulative premium and claim experience. If a policy's actual loss
ratio does not meet the benchmark ratio, the insurer must complete
further calculations to determine whether a refund or credit is
necessary to bring the loss ratio up to standard. Loss ratios on a
calendar-year basis for an individual policy are expected to be 40
percent the first year, 55 percent the second year, and 65 percent
the third year. Annual loss ratios would continue to increase until
they reach 77 percent by the 12th year and remain at that level for
the remainder of the 15-year period. This approach anticipates that
the higher loss ratios in the third and later years would offset the
lower loss ratios in the first 2 years. The methodology is designed
to ensure a cumulative 65-percent loss ratio for individual policies
by the end of a 15-year period. This same approach is used for
ensuring a 75-percent loss ratio by the end of a 15-year period for
group policies.
NAIC's methodology for determining whether a refund or credit is
required also includes a tolerance adjustment based on the number of
policyholders and the length of time they have held their policies.
A policy loss ratio based on less than 500 life-years of exposure
since inception is considered not credible, and no refund or credit
is required. After 10,000 life-years have accumulated, a policy is
considered fully credible. According to an NAIC actuarial advisory
group and several insurance regulators, this tolerance adjustment
helps ensure that refunds or credits will not occur so often in the
early years of policy experience that large premium increases will
result in later years.
An important factor in evaluating loss ratios is a policy's
credibility--that is, whether enough people have been covered under
the policy to make the loss ratio meaningful. We used two measures
of credibility. First, to make the data in this report comparable
with the data in our earlier reports, we used a threshold of $150,000
in premiums in a given year in a state.\3 Information in this report
on loss ratios that includes years before 1994 use this measure.
Second, we used a modification of NAIC's refund methodology, which,
as discussed above, measures credibility by the number of
policyholders and the number of years they have held their policies.
We used this method to assess whether policies met the applicable
loss ratio standards in 1994 and 1995.
Another factor considered when interpreting loss ratios is the length
of time a policy has been in force. The refund methodology for 1994
and 1995 indicates that Medigap loss ratios are expected to meet the
federal standard after 3 years, which is the criterion we used.
--------------------
\2 Medigap Insurance: Law Has Increased Protection Against
Substandard and Overpriced Policies (GAO/HRD-87-8, Oct. 17, 1986).
\3 A state actuary suggested this measure of credibility, which we
first used to evaluate loss ratios for 1988. Data that allowed us to
use NAIC's method of measuring credibility were first reported for
1994.
OVERALL MEDIGAP MARKET
------------------------------------------------------------ Letter :3
In the 1988-95 period, the Medigap insurance market grew from about
$7 billion to over $12 billion (see fig. 1), but most of that growth
had occurred by 1992. From 1988 through 1992, earned premiums
increased by more than 50 percent; from 1992 through 1995, growth
leveled off with premiums averaging around $12 billion.
Figure 1: Medigap Market,
1988-95
(See figure in printed
edition.)
In 1995, 352 insurance companies sold Medigap policies and collected
premiums totaling $12.5 billion with 33 companies each reporting
premiums of over $100 million and accounting for almost 75 percent of
the total (see app. II). The Prudential Insurance Company of
America, which underwrote the policies sold through the American
Association of Retired Persons (AARP), was the largest supplier of
Medigap insurance with 23 percent of the market.\4
The average Medigap loss ratio for all policies was about the same in
1995 (86 percent) as it was in 1988 (84 percent), but average loss
ratios exhibited considerable variation, increasing in some years and
decreasing in others. For example, average loss ratios increased in
1990 and 1991 followed by 2 years of declining ratios and then 2
years of increases. For the 8-year period, the average loss ratio
was 81 percent with a low of 76 percent in 1993 and a high of 86
percent in 1995. The average loss ratios for group policies have
varied substantially, ranging from 80 percent in 1989 to 95 percent
in 1995, while those for individual policies during the period have
been more stable (see fig. 2).
Figure 2: Average Loss Ratios,
1988-95
(See figure in printed
edition.)
In 1995, states differed considerably in average loss ratios.
Insurers doing business in Michigan had the highest average loss
ratio (107 percent) followed by the District of Columbia (102
percent), Massachusetts (99 percent), Pennsylvania (97 percent), and
Maine (96 percent). The five states with the lowest average loss
ratios were Nebraska (73 percent), Minnesota (75 percent), Oregon (76
percent), Delaware (76 percent), and Montana (76 percent ). Appendix
III lists average loss ratios by state. Moreover, loss ratios varied
among insurers within a state. In Michigan, for example, average
loss ratios for insurers with premiums over $150,000 ranged from 59.3
to 132.7, and, in Montana, from 29.0 to 108.8.
In 1995, the average loss ratios for the 10 standardized Medigap
plans--
from the basic Plan A to the top of the line Plan J--ranged from 73.8
percent for Plan G, to 102.3 percent for Plan A. The most popular of
the plans, Plan F, is more costly and returns less to policyholders
in benefits than the nearly identical Plan C. Plan F differs from
Plan C only in its coverage of excess physicians' charges--the
amounts doctors may bill patients above Medicare's allowed amount,
which the law limits to no more than 15 percent. In 1995, Plan F had
a nationwide average loss ratio of 75.5 percent; Plan C had an
average loss ratio of 89.3 percent. Medicare data show that for over
95 percent of claims, physicians agree to accept Medicare's allowed
amount so insurers seldom have to pay for excess charges. Moreover,
Plan F had an average loss ratio in 1995 lower than all other plans
except Plan G. Appendix IV lists the average loss ratio experience
for all 10 Medigap plans in 1995 by state.
--------------------
\4 Effective Jan. 1, 1998, Prudential no longer underwrites the AARP
Medigap policies, and its share of the market is expected to decline
dramatically. In 1998, United HealthCare Corporation will underwrite
the AARP Medigap policies.
POLICIES NOT MEETING LOSS RATIO
STANDARDS
------------------------------------------------------------ Letter :4
In 1994 and 1995, most Medigap policies that were at least 3 years
old with premiums totaling $150,000 or more in the applicable state
met the federal loss ratio standards. Premiums on credible policies
that had been issued 3 or more years ago that failed to meet the
minimum federal loss ratio standards increased from $320 million in
1991 to $1.2 billion in 1993.\5 However, premiums for policies that
failed to meet the standards decreased to $937 million in 1994 and to
$522 million in 1995 (see fig. 3).
Figure 3: Premiums for Medigap
Insurers With Mature and
Credible Loss Ratio Experience
Below the Minimum Federal
Standards, 1991-95
(See figure in printed
edition.)
Note: Policies were at least 3 years old, and experience is
considered credible when at least $150,000 was collected annually on
a policy in the applicable year within a state.
Using information not previously available in the NAIC loss ratio
data tape, we incorporated features of the refund methodology to
evaluate the 1994 and 1995 loss ratio data for policies that were at
least 3 years old. To estimate the number of policies and associated
premiums with loss ratios below standards, we measured credibility
using the number of covered lives by policy reported to NAIC.\6 Under
the refund methodology, experience of less than 500 life-years is not
considered credible, but 10,000 life-years is considered fully
credible. A tolerance adjustment is added to the actual loss ratio
on a sliding scale for life- years falling between those two
numbers.\7 In 1994, using covered lives as the measure of
credibility, the actual or adjusted loss ratios of 256 of 2,670
policies did not meet the minimum loss ratio standards, and these
companies earned $448 million in premiums on these policies. In
1995, the number of policies not meeting the standards was 141 or 4
percent of the total, and the premiums were $203 million. Appendixes
V and VI identify the policies with loss ratios below the applicable
standard, along with their premiums, benefit payments, and loss
ratios. Appendix V lists individual policies, and appendix VI lists
group policies.
--------------------
\5 See Medigap Insurance: Insurers' Compliance With Federal Minimum
Loss Ratio Standards, 1988-93 (GAO/HEHS-95-151, Aug. 23, 1995).
\6 Covered lives should closely approximate life-years. Most
policies in force in 1994 and 1995 were prestandardized policies that
could not be sold, only renewed, and would have declining numbers of
policyholders. We multiplied the number of covered lives in 1994 and
1995 by 3 and compared the result with the 10,000 life-years measure
of full credibility. Our method tends to understate the number of
policies and premiums with loss ratios below standards because most
policies have probably been in effect for longer than 3 years.
\7 For example, 15 percent is added to a policy's loss ratio if the
policy has life- years exposed since inception of 500 to 999 and 5
percent if between 5,000 and 9,999.
WHY REFUNDS AND CREDITS WERE
NOT REQUIRED
------------------------------------------------------------ Letter :5
In both 1994 and 1995, more than 10,000 different Medigap policies,
virtually all of which were standardized policies, were subject to
the OBRA 1990 refund provision and were required to send refund
calculation forms to state insurance commissioners. In those 2
years, a total of almost 14,000 policies had loss ratios below 65
percent for individual policies and below 75 percent for group
policies. However, we identified only two policies that made refunds
in 1995. One was a standardized policy sold in Iowa that refunded a
total of about $19,000 to 148 policyholders. The other was a
prestandardized plan sold in Virginia that refunded a total of about
$2,000 to 76 policyholders. In follow-up contacts with 15 selected
states, we identified only one policy sold in Illinois that refunded
a total of about $123,000 to 3,075 policyholders for 1996.
To determine why policies with loss ratios below the applicable
standard in 1994 or 1995 did not have to make refunds, we selected a
random sample of these policies with earned premiums under $1 million
and asked the states, the District of Columbia, and Puerto Rico to
send us copies of the refund calculation forms for the sample and for
all policies with premiums over $1 million. All except Michigan
responded. From the information on these forms, we determined the
reasons refunds were not required and projected the results to the
universe (see table 1).
Table 1
Reasons Insurers Were Not Required to
Make Refunds
Policies
Policies with
with earned
earned premiums
premiums equal to
less than or greater
$1 than $1
million\a million
---------- ----------
Tota
Reason 1994 1995 1994 1995 ls
---------------------------- ---- ---- ---- ---- ----
Experience not credible-- 4,38 4,20 7 2 8,60
less than 500 life-years 9 3 1
since inception
Cumulative loss ratio since 353 191 169 116 829
inception exceeded
benchmark ratio
Adjusted\b cumulative loss 0 38 9 5 52
ratio since inception
exceeded benchmark ratio
==========================================================
Subtotal 4,74 4,43 185 123 9,48
2 2 2
Not determinable\c 2,82 1,29 66 13 4,20
5 9 3
==========================================================
Total 7,56 5,73 251 136 13,6
7 1 85
----------------------------------------------------------
\a These data were developed from a sample of 150 policies in each
year. The sampling errors for estimates from this sample appear in
app. I.
\b A tolerance adjustment was added to the experience ratio because
the policies covered less than 10,000 life-years. Without the
adjustment, a refund would have resulted.
\c States could not locate or did not receive refund calculation
forms, forms were purged from files, and so forth.
About 97 percent of the policies below the loss ratio standards had
earned premiums of less than $1 million. Refunds were not required
for most policies because their experience was not considered
credible because they had less than 500 life-years since inception.
Most of the policies with earned premiums of $1 million or more did
not have to pay refunds because, although their loss ratios in 1994
or 1995 were below standards, their cumulative loss ratio since
inception was greater than the benchmark ratio for the year in
question. The benchmark ratios were designed with certain
assumptions about policy lapse rates and other factors to ensure that
the cumulative loss ratio over 15 years was at least equal to the
federal loss ratio standards. Because benefit payments are generally
low in the first years when policyholders are younger and healthier
and increase as they age, benchmark ratios are significantly below
the loss ratio standards at first and gradually increase over the
years. Because all of the policies subject to the refund provision
in 1994 and 1995 were issued within the last 3 or 4 years, they had
benchmark ratios below loss ratio standards. In fact, in 1994 and
1995, the highest benchmark ratio for any policy was 58 percent;
about 9 out of 10 policies had benchmark ratios under 50 percent.
CONCLUSIONS
------------------------------------------------------------ Letter :6
Millions of Medicare beneficiaries purchased Medigap policies,
spending over $12 billion in 1995. Federal loss ratio standards and
refund requirements are the main means of ensuring that Medigap
policyholders receive value for their premium dollars. Medigap
policies representing most of the premium dollars had loss ratios in
1994 and 1995 that were higher than federal law requires. Most
policies with loss ratios below standards in 1994 and 1995 were not
considered credible and, thus, were not subject to the refund
provision.
The amount of premiums paid for policies with loss ratios below
standards has declined substantially from 1993, the last year before
the refund provision became effective. The primary reason for
requiring refunds and credits is to give insurers incentives to meet
loss ratio standards and thereby avoid possibly unfavorable public
relations consequences. The relatively low amount of premiums for
policies with loss ratios below the standards indicates that the
incentive is working.
In commenting on a draft of this report, NAIC officials offered some
technical suggestions, which we incorporated where appropriate.
---------------------------------------------------------- Letter :6.1
We are sending copies of this report to the governor of each state,
NAIC, and interested congressional committees. We will make copies
available to others on request.
If you have any questions about this report, please call me at (202)
512-7114. Other major contributors to this report are listed in
appendix VII.
Sincerely yours,
William J. Scanlon
Director, Health Financing
and Systems
SCOPE AND METHODOLOGY
=========================================================== Appendix I
We obtained from the National Association of Insurance Commissioners
(NAIC) its computerized database of insurance companies' Medigap
annual experience exhibits for 1994 and 1995, the latest available
when we began our work. In 1994, earned premiums totaled $12.7
billion for all policies, and, in 1995, earned premiums totaled $12.5
billion. In the databases we identified policies issued after 1991
and therefore subject to the Omnibus Budget Reconciliation Act of
1990 refund provision. We then identified those policies with loss
ratios below the federal loss ratio standards. These policies had
earned premiums of about $1.3 billion in 1994 and $.7 billion in
1995. We did not test the accuracy of the 1994 database, but we did
test the accuracy of the 1995 database and found it to be accurate.
Moreover, our prior work has found these databases to be accurate.
To determine why policies with loss ratios below standards were not
required to refund premiums or credits, we randomly selected a sample
of policies with earned premiums of less than $1 million and selected
all those with premiums of $1 million or more from the NAIC 1994 and
1995 databases. We asked state insurance commissioners and those for
the District of Columbia and Puerto Rico to provide us with copies of
all refund calculation forms that insurance companies filed with them
for the related policies. All except Michigan responded. However,
for about one-third of the policies, we received no refund
calculation forms because states could not locate or did not receive
the forms or the forms had been purged from the files.
SAMPLING ERRORS
------------------------------------------------------- Appendix I:0.1
The data in the columns of table 1 (on page 10) covering policies
with earned premiums under $1 million represent projections of our
sample to the universe of policies in NAIC's databases for 1994 and
1995. Each estimate has a sampling error associated with it. The
size of the sampling error reflects the precision of the estimate:
The smaller the sampling error, the more precise the estimate. We
computed sampling errors for table 1 at the 95-percent confidence
level. This means that the chances are about 95 out of 100 that the
actual number being estimated falls within the range defined by our
estimate, plus or minus the sampling error. Table I.1 shows the
sampling errors for table 1.
Table I.1
Point Estimates and Sampling Errors for
Reasons Insurers Were Not Required to
Make Refunds
Policies with earned premiums less
than $1 million
--------------------------------------
Reasons 1994 1995
------------------ ------------------ ------------------
Experience not 4,389 +/-598 4,203 +/-406
credible--less
than 500 life-
years
Cumulative loss 353 +/-255 191 +/-165
ratio since
inception
exceeded
benchmark ratio
Adjusted 0 38 +/-75
cumulative loss
ratio since
inception
exceeded
benchmark ratio
==========================================================
Subtotal 4,742 +/-586 4,432 +/-384
Not determinable 2,825 +/-586 1,299 +/-384
==========================================================
Total 7,567 5,731
----------------------------------------------------------
MEDIGAP INSURERS WITH EARNED
PREMIUMS OVER $100 MILLION IN 1995
========================================================== Appendix II
Company Premiums earned
-------------------------------------- ------------------
Prudential Insurance Company of $2,909,412,077
America
Bankers Life & Casualty Company 583,994,554
Empire Blue Cross & Blue Shield 513,517,301
United American Insurance Company 492,021,640
Medical Service Association of 351,268,192
Pennsylvania-Pennsylvania Blue Shield
Blue Cross & Blue Shield of Florida 306,959,154
Health Care Service Corporation 287,273,870
Blue Cross & Blue Shield of Virginia 202,943,599
Blue Cross & Blue Shield of North 188,487,954
Carolina, Inc.
Blue Cross & Blue Shield of New 186,296,000
Jersey, Inc.
Physicians Mutual Insurance Company 185,293,306
Pioneer Life Insurance Company 185,214,357
Mutual of Omaha Insurance Company 175,143,666
Anthem Insurance Companies, Inc. 170,711,535
IASD Health Services Corporation 160,893,393
Blue Cross & Blue Shield of Michigan 157,371,180
Blue Cross & Blue Shield of Alabama 155,281,831
Blue Cross & Blue Shield of Tennessee 151,044,797
Blue Cross & Blue Shield of 149,054,145
Connecticut, Inc.
Standard Life & Accident Insurance Co. 143,514,398
Blue Cross & Blue Shield of Kansas, 133,867,000
Inc.
Blue Cross of Western Pennsylvania 129,057,724
American Family Life Assurance Company 124,594,322
of Columbus, Georgia
Independence Blue Cross 124,266,427
American Republic Insurance Company 115,483,145
State Farm Mutual Automobile Insurance 114,522,805
Company
Union Bankers Insurance Company 110,898,191
Blue Cross & Blue Shield of Minnesota, 108,841,204
Inc.
Capital Blue Cross 107,847,871
Hartford Life Insurance Company 104,423,624
Arkansas Blue Cross & Blue Shield 103,507,821
Southeastern Group, Inc. 101,438,477
Blue Cross & Blue Shield of Missouri 100,512,129
==========================================================
Total $9,134,957,689
----------------------------------------------------------
Source: Based on NAIC computerized files of Medigap loss ratios in
1995.
MEDIGAP LOSS RATIO EXPERIENCE BY
STATE, 1995
========================================================= Appendix III
(Dollars in millions)
Individual
All policies policies Group policies
------------------ ------------------ ------------------
Loss Loss Loss
State Premiums ratio Premiums ratio Premiums ratio
----------------------------- -------- -------- -------- -------- -------- --------
Alabama $227.3 89.7 $202.7 88.3 $24.6 101.2
Alaska 4.6 91.2 1.7 80.5 2.9 97.4
Arizona 133.7 80.1 73.8 71.1 59.9 91.2
Arkansas 124.0 86.6 98.6 82.9 25.4 101.1
California 451.4 88.9 168.8 70.8 282.6 99.7
Colorado 112.8 80.0 72.7 69.7 40.1 98.8
Connecticut 241.6 91.3 158.1 89.3 83.6 95.3
Delaware 34.5 75.7 20.1 69.7 14.4 84.0
District of Columbia 9.7 102.1 4.6 79.9 5.1 122.4
Florida 987.6 84.9 674.1 79.9 313.5 95.5
Georgia 255.0 81.7 165.5 72.4 89.4 98.9
Hawaii 6.5 92.2 3.7 85.9 2.8 100.4
Idaho 62.9 81.9 53.4 81.3 9.5 85.1
Illinois 665.2 82.4 398.2 75.7 267.0 92.3
Indiana 375.6 76.9 300.6 72.3 75.0 95.4
Iowa 275.2 82.6 239.7 81.1 35.6 92.2
Kansas 225.1 89.1 196.2 86.0 28.9 110.5
Kentucky 256.3 83.1 218.1 81.2 38.1 94.2
Louisiana 216.8 83.2 161.1 80.8 55.8 90.4
Maine 79.7 96.3 55.5 99.0 24.2 90.2
Maryland 169.1 83.9 128.6 77.2 40.5 105.3
Massachusetts 64.4 99.1 27.6 99.4 36.7 98.9
Michigan 313.5 106.5 243.5 113.5 69.9 82.0
Minnesota 214.4 74.9 201.9 73.7 12.5 94.3
Mississippi 139.3 80.2 102.7 75.6 36.6 92.9
Missouri 390.7 81.3 298.8 75.6 91.9 99.8
Montana 66.4 76.2 52.6 69.5 13.8 102.1
Nebraska 161.2 72.9 133.6 70.3 27.6 86.0
Nevada 44.8 81.3 24.4 67.5 20.4 97.8
New Hampshire 62.8 82.0 41.0 77.4 21.8 90.5
New Jersey 370.0 93.2 205.0 89.3 165.0 98.0
New Mexico 40.1 78.0 22.1 65.3 18.0 93.6
New York 898.3 89.5 453.3 92.8 445.1 86.1
North Carolina 388.7 84.4 293.1 77.5 95.6 105.3
North Dakota 67.4 79.9 63.4 78.8 4.0 96.3
Ohio 512.3 84.0 326.5 76.6 185.7 97.1
Oklahoma 179.9 80.5 142.8 76.5 37.1 95.8
Oregon 110.5 75.7 81.9 70.2 28.6 91.3
Pennsylvania 1,035.6 96.6 742.7 94.1 292.9 103.0
Puerto Rico 63.0 85.5 31.5 74.9 31.5 96.2
Rhode Island 86.1 94.9 66.5 91.4 19.6 106.7
South Carolina 154.9 83.1 107.6 76.4 47.3 98.2
South Dakota 70.3 85.4 61.5 85.3 8.8 86.3
Tennessee 316.2 84.7 188.4 79.6 127.8 92.1
Texas 713.5 83.3 376.4 74.5 337.1 93.2
Utah 54.0 84.7 40.8 78.0 13.2 105.5
Vermont 27.0 88.9 17.3 83.7 9.7 98.3
Virginia 344.2 78.6 266.3 75.3 77.9 89.8
Washington 203.5 86.0 150.4 82.9 53.0 94.6
West Virginia 94.7 82.4 57.3 72.7 37.4 97.3
Wisconsin 339.2 78.0 276.5 72.4 62.8 102.6
Wyoming 24.8 80.7 17.8 72.7 7.0 100.8
=========================================================================================
Total $12,466. 85.7 $8,511.1 81.2 $3,955.1 95.2
3
-----------------------------------------------------------------------------------------
Source: Based on NAIC computerized files of Medigap loss ratios in
1995.
LOSS RATIO EXPERIENCE FOR MEDIGAP
STANDARDIZED PLANS WITH EARNED
PREMIUMS IN EXCESS OF $500,000,
1995
========================================================== Appendix IV
Medigap plans
--------------------------------------------------------------------
State A B C D E F G H I J
------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Alabama 96.4 91.8 87.8 87.4 71.0 82.2
Alaska 69.5
Arizona 83.1 76.7 82.5 76.4 73.7 70.3 90.1 69.8 78.1
Arkansas 88.9 73.5 87.6 76.1
California 93.0 91.4 104.0 92.2 89.0 77.6 86.3 96.9 84.8 82.8
Colorado 79.8 84.1 82.4 67.1 73.4 63.2 71.8 85.5
Connecticut 80.9 93.5 90.2 91.1 81.3 102.1 98.2 83.5 78.5
Delaware 87.6 82.3 83.3 61.1 66.1
District of 94.6 93.0
Columbia
Florida 81.2 87.0 88.8 79.4 59.4 78.5 74.0 110.7 80.4 85.2
Georgia 101.1 73.8 86.3 72.2 74.0 68.8 71.6 78.2 77.9
Hawaii 96.4 86.0
Idaho 61.2 81.3 84.7 75.7 91.3
Illinois 80.8 83.5 86.0 88.1 84.4 75.3 68.6 94.5 79.0 84.5
Indiana 78.3 85.6 84.2 75.6 80.0 71.8 69.2 90.1 83.7 85.8
Iowa 63.9 77.2 98.5 80.3 90.4 76.2 60.7 80.3 92.6
Kansas 133.1 71.8 92.2 88.6 88.9 82.3 75.5
Kentucky 75.3 71.5 86.6 77.5 71.8 62.2 96.4 80.8 88.5
Louisiana 124.7 86.2 88.3 63.6 74.2 57.8 70.6 66.6
Maine 92.9 100.3 80.5 82.3 75.8
Maryland 74.6 83.9 82.9 79.1 73.6 78.6 66.6 76.3
Massachusetts\a
Michigan 131.8 80.6 81.9 63.9 67.7 59.1 66.4 71.0
Minnesota\a
Mississippi 121.2 69.7 79.7 100.9 74.3 68.6 100.3
Missouri 71.5 72.2 86.7 77.9 69.7 71.2 101.3 65.8 73.8
Montana 61.5 62.0 72.4 61.2 64.1 70.1
Nebraska 71.7 73.8 73.0 69.2 77.0 66.1
Nevada 86.2 81.0 83.9 74.7 78.2 78.5
New Hampshire 85.3 74.1 77.3 77.4 64.4
New Jersey 90.4 101.6 102.3 95.1 80.8 91.9 94.5 100.8 76.5 75.4
New Mexico 71.9 77.3 81.0 66.4 67.1 79.5
New York 87.7 95.2 94.1 101.9 77.5 80.9 74.2 95.0 79.9 61.6
North Carolina 107.9 88.1 85.0 80.0 71.0 72.3 77.5 91.4 71.1 70.2
North Dakota 70.0 82.9
Ohio 80.2 81.5 83.6 79.1 83.4 76.0 74.6 83.5 73.0 81.3
Oklahoma 90.6 76.0 82.2 82.0 70.8 80.9 71.8 78.1
Oregon 78.5 67.4 79.1 67.5 82.3 76.8
Pennsylvania 104.0 87.8 95.7 78.0 80.9 99.0 89.7
Puerto Rico 76.1
Rhode Island 95.6 92.2 100.6
South Carolina 143.5 85.2 82.5 86.1 76.0 68.0 89.5 77.6
South Dakota 75.9 74.5 109.0
Tennessee 83.9 69.3 77.0 75.0 69.8 63.4 91.8 79.0 77.0
Texas 114.3 90.0 86.5 78.8 85.0 71.6 74.0 89.5 91.2 78.0
Utah 91.8 84.8 78.6 75.9 73.2 75.2
Vermont 80.0
Virginia 82.7 76.9 88.8 83.6 68.5 79.0 74.1 72.3
Washington 91.9 90.5 90.7 61.9 74.7 73.0 78.6 87.1
West Virginia 88.5 76.6 81.2 72.7 74.6 76.7
Wisconsin\a
Wyoming 80.0 78.2 79.0
=========================================================================================
Average loss ratio 102.3 89.8 89.3 82.5 78.4 75.5 73.8 95.4 78.7 78.5
-----------------------------------------------------------------------------------------
\a States had alternate Medigap standardized programs in effect
before the federal legislation standardizing Medigap was enacted and
have waivers from this requirement.
Source: Based on NAIC computerized files of Medigap loss ratios in
1995.
MEDIGAP INSURERS WITH LOSS RATIO
EXPERIENCE BELOW THE MINIMUM
STANDARD FOR INDIVIDUAL POLICIES,
1994 AND 1995
=========================================================== Appendix V
1994 1995
---------------------------- ----------------------------
Actual Actual
or or
adjusted adjusted
Policy loss loss
State/company number Premiums Claims ratio\a Premiums Claims ratio\a
------------------- -------- -------- -------- -------- -------- -------- --------
Alabama
-----------------------------------------------------------------------------------------
None
Alaska
-----------------------------------------------------------------------------------------
None
Arizona
-----------------------------------------------------------------------------------------
American Travellers ATL- $254,769 $109,626 58.0
Life Ins. Co. RMS-87
Bankers Life & GR-A002 $551,087 $253,657 56.0
Casualty Co.
Continental General 323 268,987 108,699 55.4
Ins. Co.
United American 09 1,043,63 485,251 56.5
Ins. Co. 6
Arkansas
-----------------------------------------------------------------------------------------
Providential Life 191 632,178 308,301 58.8
Ins. Co.
California
-----------------------------------------------------------------------------------------
Colonial Penn Life 3-82- 774,060 357,978 56.2
Ins. Co. 855
Federal Home Life NAC 1,648,46 698,466 52.4
Ins. Co. 9900 3 373,962 50.9
NAC 9901 914,453
Medico Life Ins. 489 390,964 108,198 42.7
Co.
National Foundation MS3-89- 649,199 271,298 56.8
Life Ins. Co. P 835,733 300,596 51.0
MS4-89-
P
Pioneer Life Ins. 9279 4,600,12 2,519,41 59.8
Co. of Illinois 9 8
United American 04 10,037,9 5,924,23 59.0
Ins. Co. 07 25 4 53.7
09 8,524,63 4,581,19 58.5
15 5 7 60.0
12,293,2 7,192,26
32 0
5,299,39 2,913,79
3 7
Colorado
-----------------------------------------------------------------------------------------
American Travellers H-87 589,328 250,052 52.4
Life Ins. Co.
Bankers Life & GR-75R 2,076,41 1,089,58 60.0
Casualty Co. 6 5
Continental General 323 267,167 99,533 52.3
Ins. Co.
Mutual of Omaha M174 ET 264,251 105,410 54.9
Ins. Co. AL
Connecticut
-----------------------------------------------------------------------------------------
Gerber Life Ins. MS- 936,066 438,883 56.9
Co. 90,91 CT
Delaware
-----------------------------------------------------------------------------------------
Blue Cross & Blue Secure- 737,992 323,461 53.8
Shield of 65 Plus
Delaware, Inc.
District of Columbia
-----------------------------------------------------------------------------------------
None
Florida
-----------------------------------------------------------------------------------------
Continental General 324 364,024 163,728 60.0
Ins. Co.
Gerber Life Ins. MS- 2,298,74 1,084,04 54.7
Co. 901, 0 6
902,912-
FL
Mutual of Omaha M122 ET 1,445,51 716,537 57.1
Ins. Co. AL 2
State Farm Mutual 97049 2,582,32 1,414,19 59.8
Automobile Ins. 3 2
Co.
Georgia
-----------------------------------------------------------------------------------------
American Family A-1940F 512,476 249,987 58.8
Life Asr. Co.
Columbus
Atlantic American 2083 540,568 243,252 60.0
Life Ins. Co.
Humana Ins. Co. GMSIC2 3,788,45 2,189,10 57.8
4 3
New Era Life Ins. H- 477,122 127,397 36.7
Co. 0018F 105,730 36,684 49.7
H-0020C
State Farm Mutual 97049 253,145 111,567 59.1
Automobile Ins.
Co.
Union Bankers Ins. H707 2,453 223 19.1
Co.
Hawaii
-----------------------------------------------------------------------------------------
None
Idaho
-----------------------------------------------------------------------------------------
Bankers Life & GR-75R 2,670,43 1,296,08 56.0
Casualty Co. GR- 8 3 57.0
A002 809,696 380,670 59.5
GR-A020 219,010 97,555
Illinois
-----------------------------------------------------------------------------------------
American Family A-19200 524,288 256,416 58.9
Life Asr. Co.
Columbus
Bankers Life & GR-75R 8,995,37 5,012,27 55.7
Casualty Co. P1- 6 5 52.4
56566 756,513 320,965 51.7
P1- 1,753,71 775,198
67720 9
Continental General 323 401,446 151,639 52.8
Ins. Co. 332 286,993 127,070 59.3 230,945 88,787 53.4
Country Life Ins. MS-400 639,006 312,697 58.9
Co.
Guarantee Trust 82000 65,911 26,341 55.0
Life Ins. Co.
Mutual of Omaha 2CMO ET 532,326 198,633 52.3 449,009 155,006 49.5
Ins. Co. AL 976,846 481,357 59.3
M4 ET AL
Mutual Protective 990 439,000 189,871 58.3
Ins. Co.
Indiana
-----------------------------------------------------------------------------------------
Atlantic American 2083 734,548 350,161 57.7
Life Ins. Co.
Bankers Life & GR-75R 9,790,97 5,512,60 56.3 8,404,87 4,827,00 57.4
Casualty Co. 9 6 3 5
Mutual of Omaha M154 ET 400,534 165,353 51.3 414,314 171,172 51.3
Ins. Co. AL
Union Bankers Ins. H605 269,862 37,783 29.0
Co. H722 364,034 48,487 23.3
H740 380,571 43,599 21.5
Iowa
-----------------------------------------------------------------------------------------
Aid Association for 4952 245,493 95,783 54.0
Lutherans
American Family A-19200 599,311 297,342 59.6
Life Asr. Co. of
Columbus
American Republic A-3041 1,774,13 959,112 59.1
Ins. Co. 6
Bankers Life & GR-75R 9,242,31 5,096,79 55.1
Casualty Co. 9 1
Continental General 323 324,503 123,717 53.1 281,800 112,124 54.8
Ins. Co.
New York Life Ins. 8145 306,374 130,373 57.6
Co.
Kansas
-----------------------------------------------------------------------------------------
American General 6001 M- 177,235 72,671 56.0
Life & Acc. Ins. 2
Co.
Continental General 323 260,364 112,221 58.1
Ins. Co.
Federal Home Life NAC 9981 640,824 305,628 57.7
Ins. Co.
Kentucky
-----------------------------------------------------------------------------------------
Community Mutual PD010 169,566 72,632 57.8
Ins. Co.
State Farm Mutual 97049 245,285 94,807 53.7
Automobile Ins.
Co.
Louisiana
-----------------------------------------------------------------------------------------
Bankers Life & GR-A020 668,636 298,509 54.6
Casualty Co.
Colonial Penn Life 4-82- 3,010,14 1,546,58 56.4
Ins. Co. 595 5 7
New Era Life Ins. H-0020C 358,518 166,566 56.5
Co.
Providential Life 191 357,806 156,282 58.7
Ins. Co.
United American 07 548,539 165,943 45.3
Ins. Co. 09 1,082,67 524,979 58.5
3
Maine
-----------------------------------------------------------------------------------------
None
Maryland
-----------------------------------------------------------------------------------------
None
Massachusetts
-----------------------------------------------------------------------------------------
None
Michigan
-----------------------------------------------------------------------------------------
Auto-Owners Life 50277 201,445 88,778 59.1
Ins. Co. (1-90)
Continental General 324 217,372 96,866 59.6
Ins. Co.
Mutual of Omaha M129 ET 607,734 297,234 58.9
Ins. Co. AL
Minnesota
-----------------------------------------------------------------------------------------
Aid Association for 4952MN 386,658 152,325 54.4
Lutherans
American Republic A-2994 556,162 251,958 55.3 445,623 191,022 52.9
Insurance Co.
Bankers Life & GR-75R 6,799,64 3,520,88 51.8 5,121,39 2,967,10 57.9
Casualty Co. GR-A002 9 4 57.1 7 1
3,333,94 1,737,72
4 0
Combined Ins. Co. 00001497 203,093 90,591 59.6
of America 0
Continental General 316 264,207 114,167 58.2
Ins. Co. 326 679,899 245,775 46.1 539,459 226,171 51.9
Medico Life Ins. 489 656,529 308,809 57.0
Co.
State Farm Mutual 97049 384,528 155,467 50.4 354,298 171,749 58.5
Automobile Ins.
Co.
United American 09 1,244,62 591,745 57.5
Ins. Co. 10 0 557,850 240,428 58.1
16 192,774 59.4
434,205
Mississippi
-----------------------------------------------------------------------------------------
Bankers Life & GR-A020 705,045 348,873 59.5
Casualty Co.
Humana Ins. Co. GMSIC2 582,136 215,716 47.1
New Era Life Ins. H-0020C 133,983 46,351 49.6
Co.
Missouri
-----------------------------------------------------------------------------------------
Blue Cross & Blue MC-1 1,054,65 515,006 56.3
Shield of Missouri UC-24 8 5,412,40 58.5 15,681,8 8,370,94 53.4
9,245,28 3 94 5
9
Healthy Alliance MC-1 736,248 321,633 51.2
Life Ins. Co. UC-24 6,652,38 3,880,20 58.3
5 6
Old American Ins. ID3044 189,234 80,172 57.4
Co.
Montana
-----------------------------------------------------------------------------------------
Bankers Life & GR-75R 2,245,23 1,031,88 53.5
Casualty Co. 8 4
Federal Home Life NAC 7500 656,327 311,862 57.5
Ins. Co.
Nebraska
-----------------------------------------------------------------------------------------
Aid Association for 4952 457,028 202,694 54.4
Lutherans
American Family H(65) 353,638 171,052 58.4 364,213 174,812 58.0
Mutual Ins. Co.
Bankers Fidelity 2083 406,373 175,098 58.1
Life Ins. Co.
Bankers Life & GR-75R 2,728,86 1,457,82 58.4 2,323,52 1,189,44 58.7
Casualty Co. 4 9 3 6
Blue Cross & Blue 9703(I); 375,143 159,527 52.5
Shield of Nebraska 9708,17,
09(G)
Central States H & 286 413,637 171,327 56.4
L Co. of Omaha
Colonial Penn Life 4-82- 374,790 163,099 58.5
Ins. Co. 595
Continental General 323 1,302,89 456,541 42.5 1,027,78 431,607 52.0
Ins. Co. 332 6 141,030 50.6 7 131,948 53.7
396,563 340,702
Mutual of Omaha M169 ET 320,982 137,139 52.7
Ins. Co AL 553,075 248,291 59.9
M4 ET AL
Nevada
-----------------------------------------------------------------------------------------
None
New Hampshire
-----------------------------------------------------------------------------------------
None
New Jersey
-----------------------------------------------------------------------------------------
None
New Mexico
-----------------------------------------------------------------------------------------
None
New York
-----------------------------------------------------------------------------------------
Gerber Life Ins. GMS- 789,503 258,759 42.8
Co. 900 3,275,33 1,430,70 48.7
MS- 8 4
870,900
Mutual of Omaha M128 ET 2,426,21 1,319,36 59.4
Ins. Co. AL 0 3
North Carolina
-----------------------------------------------------------------------------------------
American Family A-19000 1,167,63 487,937 49.3
Life Asr. Co. of 8
Columbus
Bankers Life & GR-75R 2,447,09 1,343,19 59.9
Casualty Co. GR-A002 2 3 58.6
1,770,43 949,410
2
Colonial Penn Life 4-82- 1,350,30 643,863 55.2
Ins. Co. 595 7
Pioneer Life Ins. 9279 236,420 90,125 53.1
Co. of Illinois
United American 10 2,443,82 1,304,88 58.4
Ins. Co. 14 5 2 59.7
623,325 309,545
North Dakota
-----------------------------------------------------------------------------------------
American Family H(65) 227,795 94,426 56.5
Mutual Ins. Co.
United American 04 445,923 179,038 55.1
Ins. Co. 07 425,204 185,960 58.7
09 509,116 209,197 56.1
Ohio
-----------------------------------------------------------------------------------------
Aid Association for 4952 233,530 103,829 59.5
Lutherans
Colonial Penn Life 4-82- 954,729 477,291 60.0
Ins. Co. 595
Community Mutual PD010 3,112,20 1,230,38 39.5
Ins. Co. 2 5
Continental General 333 281,037 114,324 55.7
Ins. Co.
Mutual Protective 489 299,240 118,288 54.5
Ins. Co.
New York Life Ins. 8145 516,575 212,759 51.2
Co.
Pioneer Life Ins. 9279 1,160,04 597,560 59.0
Co. of Illinois 7
Union Bankers Ins. H740 116,357 23,203 34.9
Co.
Oklahoma
-----------------------------------------------------------------------------------------
Bankers Life & GR-75R 2,930,81 1,585,63 59.1
Casualty Co. 3 2
Mutual of Omaha M115 ET 571,402 241,190 52.2
Ins. Co. AL 1,103,37 542,800 59.2
M2 ET AL 2
Pioneer Life Ins. 9161 1,066,71 529,322 59.6
Co. of Illinois 3
Standard Life & 1222 297,480 125,864 57.3
Accident Ins. Co.
State Farm Mutual 97049 337,961 133,390 49.5
Automobile Ins.
Co.
United American 15 299,509 109,674 51.6
Ins. Co.
Oregon
-----------------------------------------------------------------------------------------
Bankers Life & GR-75R 3,797,15 1,708,12 50.0 3,080,89 1,577,54 56.2
Casualty Co. GR- 4 2 57.5 1 8 56.5
A002 1,005,83 503,180 1,191,69 584,001
GR-A020 3 9
Healthguard MC-86- 412,821 194,986 47.2
Services, Inc. 1 89,140 38,228 50.4
MO1 16,928 6,510 53.5
SM 20/ 32,585 15,485 57.5
20
SMSP -
88 -1
Mutual of Omaha M94 ET 354,137 143,975 55.7
Ins. Co. AL
Selectcare Health GC-85-1 527,446 280,878 58.3
Plans
United American 07 755,382 367,320 58.6
Ins. Co. 09 1,002,50 457,293 55.6
4
Pennsylvania
-----------------------------------------------------------------------------------------
None
Puerto Rico
-----------------------------------------------------------------------------------------
None
Rhode Island
-----------------------------------------------------------------------------------------
None
South Carolina
-----------------------------------------------------------------------------------------
Celtic Life Ins. MS POL 1,518 432 38.5
Co. F-SC
Independent Life & MCS 101 100,458 36,745 46.6
Accident Ins. Co.
North American Ins. 57 502,875 64,244 27.8
Co.
South Dakota
-----------------------------------------------------------------------------------------
Continental General 323 253,567 97,238 53.3
Ins. Co.
Tennessee
-----------------------------------------------------------------------------------------
American Family A- 907,786 442,544 58.7
Life Asr. Co. of 19000 267,769 106,746 54.9
Columbus A-1940F
Atlantic American 2083 623,534 309,567 59.6
Life Ins. Co.
Bankers Life & GR-75R 3,386,61 1,846,80 59.5
Casualty Co. 2 5
Blue Cross & Blue GA 4 868,238 237,305 27.3
Shield of
Tennessee
Pioneer Life Ins. 9279 2,549,85 1,366,30 58.6
Co. of Illinois 8 4
Texas
-----------------------------------------------------------------------------------------
American Life & 18 108,295 38,688 50.7
Acc. Ins. Co.
Atlantic American 2083 606,696 233,383 53.5
Life Ins. Co.
Bankers Life & GR-75R 9,242,70 4,892,41 52.9 7,757,28 4,320,80 55.7
Casualty Co. 3 7 5 6
Cigna Healthcare of MSPC-1- 464,474 139,144 45.0
Texas Inc. 1 (ED 4/
84)
Colonial Penn Life 4-82- 2,261,91 1,141,16 58.0 1,750,84 885,560 58.1
Ins. Co. 595 8 9 9
Harvest Life Ins. MSP- 264,967 115,313 58.5
Co. 1992F
Medico Life Ins. 489 941,946 455,325 58.3
Co.
Mutual of Omaha 2CMO ET 640,530 273,909 57.8 483,847 208,892 58.2
Ins. Co. AL 967,588 472,217 58.8
M154 ET
AL
Mutual Protective 489 531,664 233,507 58.9
Ins. Co.
New Era Life Ins. MS-2-82 363,354 161,040 44.3
Co.
Providian Life and NH 77 1,870,27 944,104 58.0
Health Ins. Co. 9
Union Fidelity Life 8350 406,984 171,095 57.0
Ins. Co.
United American 07 3,570,55 1,876,89 57.6
Ins. Co. 10 0 3 2,230,50 1,163,88 59.7
15 7 8 58.1
1,902,31 962,612
6
United Teacher MS- 2,250,19 1,231,87 59.7
Associates Ins. 910101- 6 1
Co. UTA-TX
Utah
-----------------------------------------------------------------------------------------
Blue Cross & Blue B88365- 586,325 273,336 56.6
Shield of Utah 001/
3-007
Vermont
-----------------------------------------------------------------------------------------
None
Virginia
-----------------------------------------------------------------------------------------
American Family A- 1,331,65 657,518 56.9
Life Asr. Co. of 19000 9 340,881 54.1
Columbus A-19200 773,676
Colonial Penn Life 4-82- 398,111 179,644 55.1
Ins. Co. 595
Humana Ins. Co. GMSIC2 1,546,32 696,144 52.5 1,284,15 594,943 53.8
2 0
Nationwide Life 1522 121,949 -985 14.2
Ins. Co.
Union Bankers Ins. H707 115,205 15,758 28.7
Co. H708 151,712 26,894 27.7
H722 79,567 20,271 40.5
H740 133,562 20,531 30.4
Washington
-----------------------------------------------------------------------------------------
Bankers Life & GR-75R 3,306,17 1,502,58 50.4 2,606,75 1,364,86 57.4
Casualty Co. GR-A002 9 3 58.1 5 7
587,311 282,746
Blue Cross of 701- 8,206,72 4,735,88 57.7
Washington & 10535 4 2
Alaska
Continental General 324 527,093 244,938 56.5 452,707 218,490 58.3
Ins. Co.
Federal Home Life NAC 7500 415,986 176,388 57.4
Ins. Co.
Healthguard 1000 529,713 264,375 59.9
Services of
Washington
King County Medical 34200 3,708,54 2,180,11 58.8
Blue Shield 5 2
Mutual Protective 489 1,392,67 724,979 59.6 1,119,43 507,746 55.4
Ins. Co. 990 5 348,692 50.2 5 448,113 58.7
866,654 921,003
Pierce County 1-434- 10,351 377 18.6
Medical Bureau 00-00-
Ins. 00-N
West Virginia
-----------------------------------------------------------------------------------------
United American 09 759,805 373,871 59.2
Ins. Co.
Wisconsin
-----------------------------------------------------------------------------------------
American Family H65(WI) 5,919,96 3,479,68 58.8
Mutual Ins. Co. 2 2
Colonial Penn Life 4-82- 3,207,66 1,523,79 55.0 2,330,28 1,200,14 59.0
Ins. Co. 595 2 3 1 0
Mutual of Omaha 50VB ET 341,678 133,046 53.9
Ins. Co. AL 918,719 416,877 55.4
M40 ET
AL
Wyoming
-----------------------------------------------------------------------------------------
Bankers Life & GR-75R 354,024 156,074 59.1
Casualty Co.
=========================================================================================
Total $247,770 $127,459 $88,374, $45,005,
,816 ,963 159 374
-----------------------------------------------------------------------------------------
Note: Policies are at least 3 years old and had at least 500 covered
lives over 3 years.
\a A tolerance adjustment of between 5 and 15 percent is added to the
actual loss ratio on a sliding scale for life-years falling between
500 and 9,999.
Source: Based on NAIC computerized files of Medigap loss ratios for
1994 and 1995.
MEDIGAP INSURERS WITH LOSS RATIO
EXPERIENCE BELOW THE MINIMUM
STANDARD FOR GROUP POLICIES, 1994
AND 1995
========================================================== Appendix VI
1994 1995
---------------------------- ----------------------------
Actual Actual
or or
adjusted adjusted
Policy loss loss
Company form Premiums Claims ratio\a Premiums Claims ratio\a
------------------- -------- -------- -------- -------- -------- -------- --------
Alabama
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M $391,064 $206,196 67.7
Co. of North
America
Providian Life and NH1380 479,327 262,521 64.8 $401,380 $214,042 68.3
Health Ins. Co.
Alaska
-----------------------------------------------------------------------------------------
None
Arizona
-----------------------------------------------------------------------------------------
Principal Mutual GC500(D) 305,735 168,663 70.2
Life Ins. Co.
Provident Life & F-65872 689,831 438,586 73.6
Accident Ins. Co.
Arkansas
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 342,856 193,845 71.5
Co. of North
America
Providian Life and NH1380 251,983 137,344 69.5
Health Ins. Co.
California
-----------------------------------------------------------------------------------------
Allianz Life Ins. GSC1667 476,719 200,159 57.0 337,987 192,331 71.9
Co. of North VAP1008 791,299 439,463 65.5 614,725 343,121 63.3
America VAP1030 557,304 348,048 70.0
56,367 26,405 61.8
VAP1030A 137,803 57,625 56.8
VAP1030D
Assured Investors AILCMSST 812,116 397,478 48.9
Life Co. D POLICY
(A7-92)
Calfarm Ins. Co. GH1000 33,070 5.0
Monumental Life MS3000PG 5,663,35 3,790,94 66.9
Ins. Co. M 8 5
Provident Life & F-65872 5,464,82 3,797,92 74.5
Accident Ins. Co. 9 7
United Teacher 4006 49,444 27,249 70.1
Associates Ins.
Co.
USAA Life Ins. Co. AG7001 1,130,81 753,652 74.1
7
Colorado
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 176,012 112,865 74.1
Co. of North GSC1054 79,300 35,437 59.7
America
Hartford Life Ins. SRP- 698,187 455,320 72.7
Co. 1261
Monumental Life MS3000PG 346,101 177,584 61.3
Ins. Co. M
Principal Mutual GC500(D) 489,172 277,550 71.7
Life Ins. Co.
Connecticut
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 289,142 126,580 58.8
Co. of North
America
Blue Cross & Blue 03 5,945,86 4,166,50 70.1
Shield of 4 1
Connecticut, Inc.
Delaware
-----------------------------------------------------------------------------------------
Blue Cross & Blue STANDARD 755,031 324,956 53.0 676,197 328,544 58.6
Shield of
Delaware, Inc.
Prudential Ins. Co. MS-1218 304,978 165,614 69.3
of America
District of Columbia
-----------------------------------------------------------------------------------------
Allianz Life Ins. GSC1849 49,751 19,078 48.3
Co. of North
America
Florida
-----------------------------------------------------------------------------------------
USAA Life Ins. Co. AG7001 1,368,77 912,242 74.1
3
Georgia
-----------------------------------------------------------------------------------------
Allianz Life Ins. GSC1054 257,105 143,683 70.9
Co. of North
America
Monumental Life MS3000PG 608,240 361,413 69.4
Ins. Co. M
Provident Life & F-65872 622,238 351,613 66.5 694,296 421,912 70.8
Accident Ins. Co.
Providian Life and NH1380 1,106,11 701,523 70.9
Health Ins. Co. 8
Hawaii
-----------------------------------------------------------------------------------------
Hartford Life Ins. SRP- 146,749 67,145 60.8
Co. 7318
Idaho
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 151,438 84,887 71.1
Co. of North
America
Illinois
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 440,515 246,360 70.9 363,062 218,093 70.1
Co. of North
America
Health Care Svc. CB 44.7 4,263,51 3,034,81 71.2
Corp. CB 44.8 12,480,5 8,501,67 68.1 0 6 71.0
GB 10- 18 0 64.2 12,013,7 8,533,74
A2.1 54,172,4 34,802,5 66.5 91 0 65.5
GB 10- 13 71
A2.2 12,565,7 8,355,20 12,390,7 8,111,55
33 1 62 4
Preferred Life Ins. GSC1014P 250,736 4,513 16.8
Co. of New York L
Principal Mutual GC500(D) 1,384,36 911,014 73.3
Life Ins. Co. 8
Providian Life and NH1380 1,099,54 736,768 74.5
Health Ins. Co. 3
Indiana
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 224,407 100,801 54.9
Co. of North
America
Monumental Life MS3000PG 394,623 220,272 65.8
Ins. Co. M
Providian Life and NH1380 659,274 372,611 66.5 576,815 329,376 67.1
Health Ins. Co.
Iowa
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 128,840 62,813 63.8
Co. of North GSC1054 283,967 28,332 25.0
America
Principal Mutual 13,231,9 8,777,43 66.3
Life Ins. Co. GC500(D) 91 8
GC500(D- 197,767 86,602 58.8
MSP)
Kansas
-----------------------------------------------------------------------------------------
None
Kentucky
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 144,266 71,372 64.5
Co. of North
America
Providian Life and NH1380 285,448 156,556 69.8
Health Ins. Co.
Louisana
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 403,342 254,408 73.1
Co. of North
America
Hartford Life Ins. SRP- 549,600 302,679 62.6
Co. 1261
Maine
-----------------------------------------------------------------------------------------
Assoc. Hospital 028073 7,570,43 1,399,34 18.5
Service of Maine 028760 9 6 68.2
532,198 309,672
Maryland
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 535,523 166,954 41.2 454,686 207,020 53.0
Co. of North
America
Hartford Life Ins. SRP- 711,030 465,802 73.0 670,287 371,099 62.9
Co. 1261
Massachusetts
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 456,999 280,314 68.8 426,792 249,120 68.4
Co. of North
America
Provident Life & F-65872 393,986 207,927 67.8
Accident Ins. Co.
Michigan
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 168,638 100,265 74.5
Co. of North
America
Union Labor Life 610400 182,955 102,064 70.8
Ins. Co.
Minnesota
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 210,672 90,240 57.8 147,853 63,827 58.2
Co. of North
America
Preferred Life Ins. GSC1014P 145,662 6,033 19.1
Co. of New York L
Prudential Ins. Co. 1 8,937,88 5,445,47 60.9
of America 5 8
Mississippi
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 340,596 209,011 71.4
Co. of North
America
Providian Life and NH1380 358,578 188,534 67.6
Health Ins. Co.
Missouri
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 395,011 237,921 70.2
Co. of North
America
Blue Cross & Blue C-60 1,277,45 948,182 74.2
Shield of Missouri UC-24 6 914,031 64.9
1,524,89
9
Fidelity Security M00057 246,798 139,038 71.3
Life Ins. Co.
Hartford Life Ins. SRP- 475,439 272,092 64.7
Co. 7318
Providian Life and NH1380 826,958 482,015 68.3 666,400 370,817 65.6
Health Ins. Co.
Montana
-----------------------------------------------------------------------------------------
None
Nebraska
-----------------------------------------------------------------------------------------
Principal Mutual GC500(D) 6,926,66 4,901,81 70.8
Life Ins. Co. 0 4
Nevada
-----------------------------------------------------------------------------------------
None
New Hampshire
-----------------------------------------------------------------------------------------
Blue Cross & Blue 061.065 453,166 250,048 70.2
Shield of New 061.067 5,285,44 3,755,87 71.1
Hampshire 7 9
Prudential Ins. Co. 1 6,773,66 3,633,23 53.6
of America 5 7
New Jersey
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 466,634 231,410 59.6
Co. of North
America
Colonial Penn 10-82- 245,645 135,172 65.0 239,876 145,855 70.8
Franklin Ins. Co. 460
Providian Life and NH 910 359,811 143,756 55.0
Health Ins. Co. NH1380 894,015 501,079 66.0 787,284 442,290 66.2
Union Labor Life 610400 328,668 182,038 70.4
Ins. Co.
New Mexico
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 110,336 65,178 74.1
Co. of North
America
Monumental Life MS3000PG 192,566 110,334 72.3
Ins. Co. M
New York
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 363,481 148,642 55.9 290,138 151,843 62.3
Co. of North
America
Empire Blue Cross & MS-MMR 4,693,64 3,004,64 69.0
Blue Shield 4 3
Hartford Life Ins. SRP- 682,169 397,378 65.8
Co. 1261 87,366 39,123 59.8
SRP-
1265
International Life ILI- 1,288,66 763,485 66.7
Investors Ins. Co. GP21050M 4
G
Monumental Life MS3000PG 512,008 255,461 59.9
Ins. Co. M
Prudential Ins. Co. G- 33,238,2 24,235,0 72.9
of America 36000- 49 31 57.8
4 3,241,14 1,712,33
MOVERS 2 9
Union Labor Life 610400 811,688 518,807 73.9
Ins. Co.
North Carolina
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 812,412 478,149 68.9 787,196 502,037 71.3
Co. of North
America
Group SU65- 2,935,67 1,389,93 52.3
Hospitalization & 0792 5 3
Med. Srvcs.
Provident Life & F-65872 548,042 321,002 73.6
Accident Ins. Co.
Providian Life and NH1380 1,429,25 790,516 62.8 1,210,93 715,871 66.6
Health Ins. Co. 2 5
North Dakota
-----------------------------------------------------------------------------------------
None
Ohio
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 290,496 141,423 63.7
Co. of North
America
Colonial Penn 10-82- 374,958 239,496 73.9
Franklin Ins. Co. 460
Monumental Life MS3000PG 1,621,31 1,054,04 72.5 1,394,37 966,755 74.3
Ins. Co. M 2 4 7
Nationwide Life GR- 4,351,53 2,953,67 67.9
Ins. Co. 11000 4 9
Provident Life & F-65872 1,251,33 810,139 74.7
Accident Ins. Co. 5
Providian Life and NH 910 353,175 209,255 74.2
Health Ins. Co. NH1380 1,334,67 812,948 68.4 1,131,63 712,063 70.4
5 2
Oklahoma
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 260,903 143,428 65.0
Co. of North
America
Providian Life and NH1380 417,232 233,919 71.1 337,658 132,977 54.4
Health Ins. Co.
Oregon
-----------------------------------------------------------------------------------------
Monumental Life MS3000PG 244,888 141,621 72.8 203,644 106,495 67.3
Ins. Co. M
Pennsylvania
-----------------------------------------------------------------------------------------
Providian Life and NH1380 1,366,55 780,163 64.6 1,133,49 730,681 72.0
Health Ins. Co. 9 0
Puerto Rico
-----------------------------------------------------------------------------------------
None
Rhode Island
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 123,377 62,845 65.9
Co. of North
America
Prudential Ins. Co. G- 122,633 71,746 73.5
of America 36000-4
South Carolina
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 408,976 252,948 71.8
Co. of North
America
Monumental Life MS3000PG 214,110 114,691 68.6
Ins. Co. M
South Dakota
-----------------------------------------------------------------------------------------
None
Tennessee
-----------------------------------------------------------------------------------------
Allianz Life Ins. GSC1054 193,514 85,016 58.9 140,263 65,902 57.0
Co. of North GHC215M 783,372 461,157 68.9
America
Blue Cross & Blue 85 1,418,76 899,416 70.9 1,523,88 986,299 72.2
Shield of 8 0
Tennessee
Memphis Hospital BC65- 256,710 126,073 64.1
Svc. & Surg. Asn., CO-051
Inc.
Monumental Life MS3000PG 599,087 376,008 72.8
Ins. Co. M
Principal Mutual GC500(D) 222,436 132,083 74.4
Life Ins. Co.
Providian Life and NH1380 907,211 524,052 67.8 750,492 449,652 69.9
Health Ins. Co.
Texas
-----------------------------------------------------------------------------------------
Allianz Life Ins. D603 125,838 68,428 69.4
Co. of North
America
Blue Cross & Blue ST- 175,543 89,496 66.0
Shield of Texas, II(B)-1
Inc.
Business Mens GR 838- 82,426 23,087 43.0
Assurance Co. of 1
America
Monumental Life MS3000PG 2,018,92 1,176,26 63.3
Ins. Co. M 6 2
Principal Mutual GC500(D) 3,086,36 2,000,69 72.3
Life Ins. Co. TX 5 0
USAA Life Ins. Co. AG7001 1,690,98 1,126,98 71.6
8 7
Utah
-----------------------------------------------------------------------------------------
None
Vermont
-----------------------------------------------------------------------------------------
None
Virginia
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 2,267,63 1,055,08 51.5 1,831,92 1,105,61 60.4
Co. of North GSC1054 6 0 5 6 61.2
America 92,682 42,809
Monumental Life MS3000PG 852,300 563,155 73.6
Ins. Co. M
Providian Life and NH 910 307,993 148,361 63.2
Health Ins. Co. NH1380 1,541,93 973,863 70.7 1,346,90 882,312 73.0
3 1
Washington
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 1,105,51 698,292 70.7 1,139,50 681,572 64.8
Co. of North GSC1054 0 0 46,357 67.0
America 89,213
Hartford Life Ins. SRP- 1,129,62 673,858 64.7
Co. 1261 7
Provident Life & F-65872 316,479 173,401 69.8
Accident Ins. Co.
Providian Life and NH1380 291,188 155,462 68.4 230,888 109,612 62.5
Health Ins. Co.
West Virginia
-----------------------------------------------------------------------------------------
Hartford Life Ins. SRP- 99,418 55,145 70.5
Co. 7318
Mountain State Blue ED214 1,152,64 708,483 71.5
Cross & Blue ED215 902,906 489,823 64.2 7 596,669 71.9
Shield 964,531
Providian Life and NH1380 681,900 422,690 72.0
Health Ins. Co.
Wisconsin
-----------------------------------------------------------------------------------------
Allianz Life Ins. GHC215M 247,899 130,692 67.7 228,983 135,113 69.0
Co. of North
America
Provident Life & F-65872 561,191 317,123 71.5
Accident Ins. Co.
Wyoming
-----------------------------------------------------------------------------------------
None
=========================================================================================
Total $199,954 $126,124 $114,253 $71,901,
,296 ,195 ,308 976
-----------------------------------------------------------------------------------------
Note: Policies are at least 3 years old and had at least 500 covered
lives over 3 years.
\a A tolerance adjustment of between 5 and 15 percent is added to the
actual loss ratio on a sliding scale for life-years falling between
500 and 9,999.
Source: Based on NAIC computerized files of Medigap loss ratios for
1994 and 1995.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix VII
Thomas G. Dowdal, Assistant Director, (202) 512-6588
William A. Hamilton, Evaluator-in-Charge
Michael Piskai
Wayne J. Turowski
*** End of document. ***