Explain and pressure-test group rating and renewals: rating factors, manual vs experience rating weighted by credibility, the underwriting loss ratio vs the ACA medical-loss-ratio (MLR) test, and decomposing/sanity-checking a renewal projection (trend, experience, pooling, demographics, plan change) — educational scaffolding, not actuarial advice.
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---
name: underwriting-and-rating
description: "Explain and pressure-test group rating and renewals: rating factors, manual vs experience rating weighted by credibility, the underwriting loss ratio vs the ACA medical-loss-ratio (MLR) test, and decomposing/sanity-checking a renewal projection (trend, experience, pooling, demographics, plan change) — educational scaffolding, not actuarial advice."
---
# Underwriting & Rating
## Credibility first
Whether a group's own claims experience drives its rate is a function of group size and claim volume. Small groups lean manual/pooled; large groups on own experience; most are a credibility-weighted blend. Name the credibility weight before arguing the rate — and treat a single large claim in a low-credibility group as noise (pooling exists for it).
## Rating factors
Age/gender (where permitted), geography/area, industry/SIC, group size, plan richness/actuarial value, participation, and prior claims experience. Make the factors explicit so the sponsor knows what's driving the price.
## Loss ratio ≠ MLR
The incurred loss ratio (claims ÷ premium) is the underwriting read; the ACA medical-loss-ratio is a defined regulatory test with rebate thresholds (80% individual/small-group, 85% large-group `[verify-at-build]`). Don't conflate them. A ratio below the MLR floor is a possible over-rating / rebate signal — information for the next negotiation.
## Decompose the renewal
A renewal is a sum of parts: trend + own (credibility-weighted) experience + pooling/large-claim adjustment + demographic drift + plan/benefit change. "+X%" is not a finding. Separate trend (the silent, compounding driver the sponsor can't control) from group-specific experience (which they can influence). If a carrier won't show the decomposition, re-market.
## Sanity-check & levers
Build or check the projection against the parts, then name the levers that move it: plan changes, a funding move, contribution shift, or re-marketing. For self-funded groups, model the specific and aggregate stop-loss attachment points — that's where the risk lives.
## Output
A renewal-and-rate review: the decomposition, the credibility/loss-ratio/MLR read, and the levers that move the rate — `[verify-at-build]` on every quantitative figure, flagged as educational with a credentialed-actuary sign-off. Route plan/funding redesign to `benefits-advisor` and carrier coordination to `enrollment-and-compliance-lead`.
