NU Online News Service, Aug. 6, 2:15 p.m. – American Medical Security Group Inc., GreenBay, Wis., says it will switch to a block rating system Jan. 1, 2003, for all of its MedOne individual and family health insurance policies.
The switch means that American Medical will base rates mostly on the health status of entire blocks of insureds, rather than using a “tier rating” system that offers lower rates to insureds in good health and higher rates to insureds in poor health.
American Medical has already been using a block rating system in 10 states. The switch will affect American Medical policies in 20 other states, the company said.
The company is also instituting a block rating system Nov. 1 in Florida in connection with efforts to resolve a dispute over use of tier rating with Florida insurance regulators.
“We continue to believe that tier rating is appropriate and effective, and has advantages for the majority of our insureds,” Samuel Miller, American Medical chairman, says in a statement about the switch.
But American Medical is making the change voluntarily because of worries that agents and insureds might have misperceptions about the tier rating system, Miller says.