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Senate Bill Report — SB 5141, Group Disability Income Rate Manual Filings (As of January 22, 2025)

Summary

This Senate Bill Report on SB 5141, as of January 22, 2025, covers an act requiring that experience-rated group disability income insurers include all applicable rating factors and credibility formulas in rate manual filings with the insurance commissioner. It names Senators Cortes, Dhingra, Hasegawa, Liias, Nobles and Salomon as sponsors and lists committee activity before Business, Financial Services & Trade on 1/23/25. The background states that, in a March 2023 technical assistance advisory, OIC reiterated that if a group’s rate cannot be replicated exactly using the rate manual, it cannot be filed through a rate manual filing. The summary of the bill states that such filings must be detailed enough to allow OIC to replicate the premium rates for the experience-rated group.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Issuer
Congressional materials
Document type
Report
Date
2025-01-23
Case
2025 01 23 A32437 D275406 Bill Report 5141 Sba Bft 25

Cite this document

“Senate Bill Report — SB 5141, Group Disability Income Rate Manual Filings (As of January 22, 2025).” Original at app.leg.wa.gov, dated 2025-01-23. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2025-01-23-2025-01-23-a32437-d275406-bill-report-5141-sba-bft-25/, SHA-256 d0bf072e6ca0e1d0a0cbebcb5c72aa37fa0811b8d6a21298250262fd6a1fe5ea.

Full text

                            SENATE BILL REPORT
                                  SB 5141

                                      As of January 22, 2025

Title: An act relating to requiring that experience-rated group disability income insurers include
     all applicable rating factors and credibility formulas in rate manual filings with the
     insurance commissioner.

Brief Description: Requiring that experience-rated group disability income insurers include all
     applicable rating factors and credibility formulas in rate manual filings with the insurance
     commissioner.

Sponsors: Senators Cortes, Dhingra, Hasegawa, Liias, Nobles and Salomon.

Brief History:
     Committee Activity: Business, Financial Services & Trade: 1/23/25.


                                     Brief Summary of Bill
           • Specifies rate filing requirements for experience-rated group disability
             income insurers.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

     Staff: John Kim (786-7453)

     Background: Disability Income Insurance. Disability income (DI) insurance provides
     income to individuals who cannot work because of an illness or injury. Group DI
     insurance, including short- and long-term coverage, is tied to employment and is offered as
     a benefit by some employers.

     Group Disability Income Insurance Rate Filings. Before using rates charged for DI
     insurance premiums, insurers must make rate filings with the Office of the Insurance
     Commissioner (OIC), which reviews filed rates to ensure they are not excessive,
     inadequate, or unfairly discriminatory. A rate filing for a particular insurance product



     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

Senate Bill Report                              -1-                                             SB 5141
     includes a manual of classification, manual of rules and rates, and any modifications.

     A group DI insurer may make a rate filing covering rates for multiple groups (group)
     through a rate manual filing. In a rate manual filing, rates are developed through a standard
     rating methodology without using a group’s partial or entire disability claim experience.
     The rate manual must account for all rules and formulas the company uses to calculate the
     premium charged. If a group’s rate is developed from the rate manual, OIC must be able,
     when given the demographics of the group, to replicate the group’s rate from the rate
     manual.

     In a March 2023 technical assistance advisory, OIC reiterated that if a group’s rate cannot
     be replicated exactly using the rate manual, it cannot be filed through a rate manual filing.
      If a DI insurer develops premium rates for a single group based on the group's disability
     claim experience, it may not file one rate that applies to all experience-rated groups, as the
     insurer is relying on each group's unique claim experience to develop its rates.

     OIC advised that an experience-rated insurer must instead submit an additional filing unique
     to each particular group called a single case or an employer group filing. OIC stated its
     expectation that single case filings should focus on the justifications for the experience
     rating; would be not more than a few pages each; should incorporate the approved rate
     manual and other filing aspects by reference only; and must include an actuarial
     certification.

     Credibility. In ratemaking, credibility measures how much predictive weight should be
     given to the group's own claims experience versus the weight given to other data in
     determining future claims. A fully credible group is one where the data sample size is large
     enough that based on a selected confidence interval, its subject experience is assigned full
     predictive value. A partially credible group requires blending its subject experience with
     information from one or more sets of related experience in order to improve the estimate of
     expected values.

     Summary of Bill: Experience-rated group DI insurers must include in their rate filings
     their experience rating formulas including all applicable rating factors and credibility
     formulas as part of the rate manual. Such filings must be detailed enough to confirm that a
     group is fully or partially credible and to allow OIC to replicate the premium rates for the
     experience-rated group if given the experience and demographics of the group.

     Appropriation: None.

     Fiscal Note: Available.

     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: Ninety days after adjournment of session in which bill is passed.


Senate Bill Report                             -2-                                         SB 5141

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