| | INSTRUCTIONS FOR HEALTH QUOTATIONS |
| 1 | This sheet contains clarifications on the quotation process required by the Underwriting Circular. |
| 2 | All insurance companies must, in addition to this experience form, obtain full exposure data at the inception date of the policy in order to finalise a quotation. |
| 3 | The required exposure data must be consistent with the company's underwriting manual. |
| 4 | Exposure Data must show all lives to be covered, and should show the rating factors used by the company for every life. Data may be used in quotations aggregated by age bands, provided these age bands are shown. |
| 5 | Full demographic data must be provided before any quotation may be provided. Age and sex of lives to be covered may be provided on an individual basis, or may be age banded. |
| 6 | Any health insurance quotation must be age, sex, employee/dependent status and benefit level dependent, at a minimum. Benefit levels must take into account provider classes and network options. It is not permitted to quote a flat fixed cost applicable to all lives covered. |
| 7 | Companies must quotes premium rates sub-divided by rating factors, and these should be in proportion to the company's book rates. Exceptions to this may only be adopted where the claims experience for the group is highly credible, and the mechanism for setting the rates is defined fully in the company's Underwriting Manual. |
| 8 | The Insurance Company must determine Book Rates for all health insurance quotations, unless the amount of claims experience is sufficient to be fully credible. The amount of experience needed for full credibility must be defined by the actuary, and documented in the Underwriting Manual. |
| 9 | The Insurance Company must determine Experience or Burning Cost Rates for all health insurance quotations, unless the number of lives is below the threshold set by the actuary The threshold must be documented in the Underwriting Manual. |
| 10 | It should be noted that the Insurance Company is required to collect experience data even when the number of lives is below the threshold. The company's underwriters should consider whether claims on small groups are indicative of issues that may merit individual underwriting. |
| 11 | Where Book Rates and Experience / Burning Cost Rates have been determined, the company must determine a Blended Rate using the credibility formulae approved by the actuary. The credibility formulae must be fully documented in the Underwriting Manual. |
| 12 | This Blended Rate represents the minimum rate that the company may quote. It is fully acceptable to quote higher rates if the Underwriter is not comfortable with the Blended Rate. |
| 13 | All loadings for expenses and profit determined by the actuary, and documented in the Underwriting Manual must be included in the Gross Premium Rates. It is only necessary to quote the Gross Premium Rates to the client. |
| 14 | Lower quotations may only be prepared to the extent that these are fully defined within the company's Underwriting Authority Statement, which must be included in the Underwriting Manual, approved by SAMA. |
| 15 | For Medical Expenses groups, it is not permitted for an Insurance Company to offer profit sharing arrangements. |
| 16 | |
| 17 | During 2015, quotations may only be provided if at least two or more years' claims experience is provided. |
| 18 | From 2016 onwards, quotations may only be provided if at least 3 or more years’ claims experience is provided. |
| 19 | If a risk is entirely new, the insurance company may only quote the book rates, which have been submitted to SAMA. The insurance company is not allowed to apply any discounts to these rates. |
| 20 | If the risk has been in existence for less than 3 years from 2016, or 2 years from 2015, then the insurance company may quote, provided they receive full claims experience for the time the risk has been in existence. |
| 21 | No insurance company is allowed to provide any quotation for medical expenses unless it has received claims experience, except if the risk is entirely new |
| 22 | Risks may be referred to the company's Responsible Actuary to quote, provided there is some claims experience. Entirely new risks with no claims experience may not be referred to the actuary. |
| 23 | An insurance company can provide a quotation as illustration only based on the information provided to it. However, the insurance company must amend the quotation based on full underwriting data. It may not issue a policy on quoted rates until it has full data to provide an accurate quotation. Under no circumstances may an insurance company provide actual rates, unless it has sufficient data, subdivided according to the rating factors it will adopt in its Underwriting Manual |
