State RegulationsNY specificDifficulty 2/5
An insurer wants to increase the premiums it charges for its New York Medicare supplement policies. Under the guaranteed renewability requirement, how may the premium be adjusted?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under the New York Insurance Law, guaranteed renewability locks in the insured's right to continued coverage, not an unchanging price. The insurer must renew the policy, but it may revise premiums on a class basis, applying the change uniformly to all policies in the affected class rather than singling anyone out. Re-pricing an individual policyholder because of that person's claims or health is not permitted; that would let the insurer price sick insureds out one at a time and would gut the guarantee the Department of Financial Services enforces.
Why the other options are wrong
- A) Individual re-underwriting based on claims is prohibited; the guarantee would be meaningless if costly claimants could be priced out one at a time.
- C) A premium frozen for life describes a noncancellable policy; guaranteed renewable coverage permits class-wide rate revisions.
- D) Unanimous policyholder consent is not required for a class rate adjustment that complies with New York law.
Memory hook
Guaranteed renewable fixes the right to renew, not the price; rates move by class only.