3923.022 Maximum aggregate administrative expenses.

(A) As used in this section:

(1)(a) “Administrative expense” means the amount resulting from the following: the amount of premiums received by the insurer for sickness and accident insurance business minus the sum of the amount of claims for losses paid; the amount of losses incurred but not reported; the amount paid for state fees, federal and state taxes, and reinsurance; and the costs and expenses related, either directly or indirectly, to the payment of commissions, measures to control fraud, and managed care.

(b) “Administrative expense” does not include any amounts collected, or administrative expenses incurred, by an insurer for the administration of an employee health benefit plan subject to regulation by the federal “Employee Retirement Income Security Act of 1974,” 88 Stat. 832, 29 U.S.C.A. 1001, as amended. “Amounts collected or administrative expenses incurred” means the total amount paid to an administrator for the administration and payment of claims minus the sum of the amount of claims for losses paid and the amount of losses incurred but not reported.

(2) “Insurer” means any insurance company authorized under Title XXXIX [39] of the Revised Code to do the business of sickness and accident insurance in this state.

(3) “Sickness and accident insurance business” does not include coverage provided by an insurer for specific diseases or accidents only; any hospital indemnity, medicare supplement, long-term care, disability income, one-time-limited-duration policy of no longer than six months, or other policy that offers only supplemental benefits; or coverage provided to individuals who are not residents of this state.

(B) Notwithstanding section 3941.14 of the Revised Code, the following apply to every insurer:

(1) For calendar year 1993, each insurer shall have aggregate administrative expenses of no more than forty per cent of the premium income of the insurer, based on the premiums received in that year on the sickness and accident insurance business of the insurer.

(2) For calendar year 1994, each insurer shall have aggregate administrative expenses of no more than thirty per cent of the premium income of the insurer, based on the premiums received in that year on the sickness and accident insurance business of the insurer.

(3) For calendar year 1995, each insurer shall have aggregate administrative expenses of no more than twenty-five per cent of the premium income of the insurer, based on the premiums received in that year on the sickness and accident insurance business of the insurer.

(4) For calendar year 1996 and every calendar year thereafter, each insurer shall have aggregate administrative expenses of no more than twenty per cent of the premium income of the insurer, based on the premiums received in that year on the sickness and accident insurance business of the insurer.

(C) Each insurer, on the first day of January or within sixty days thereafter, shall annually prepare, under oath, and deposit in the office of the superintendent of insurance a statement of the aggregate administrative expenses of the insurer, based on the premiums received in the immediately preceding calendar year on the sickness and accident insurance business of the insurer.

(D) No insurer shall fail to comply with division (B) of this section.

(E) If the superintendent determines that an insurer has violated division (D) of this section, the superintendent, pursuant to an adjudication conducted in accordance with Chapter 119. of the Revised Code, may order the suspension of the insurer’s license to do the business of sickness and accident insurance in this state until the superintendent is satisfied that the insurer is in compliance with division (B) of this section. If the insurer continues to do the business of sickness and accident insurance in this state while under the suspension order, the superintendent shall order the insurer to pay one thousand dollars for each day of the violation.

(F) Any money collected by the superintendent under division (E) of this section shall be deposited by him into the state treasury to the credit of the department of insurance operating fund.

Effective Date: 01-14-1993