State insurance regulators want to keep a tool it uses to identify health insurers with poor control over growth from making new health insurers look bad.
The Capital Adequacy Task Force, an arm of the National Association of Insurance Commissioners (NAIC), is asking for comments on a proposed change to the health risk-based capital (RBC) reporting blanks.
Regulators use RBC levels to estimate whether insurers have enough capital to support the business they have written. The proposed health RBC blank change would affect calculations that show whether RBC seems to be growing quickly enough to support growth in the amount of business written.
The blanks include those calculations because of a concern that, in some cases, insurers may price coverage too cheaply and take on more risk than they can handle. The companies that take on too much risk may have to increase prices substantially or go out of business.
Regulators now suggest that, at a typical health insurer, growth in RBC levels should be about 10 percentage points higher than growth in underwriting risk revenue. If revenue increases 30 percent between the prior year and the current year, for example, the “safe harbor” growth rate for the RBC supporting that business might be about 40 percent, officials say.