.09 Premiums for Converted Policies.

A. Except as provided in §C of this regulation, the initial premium for the converted policy for the first 12 months and subsequent renewal premium shall be determined in accordance with the carrier's premium rates applicable to:

(1) Individually underwritten standard risks;

(2) The age and class of risk of each individual to be covered under the converted policy; and

(3) The type and amount of coverage provided.

B. The experience under converted policies may not be an acceptable basis for establishing rates for converted policies.

C. A carrier may amend renewal premium rates for the subsequent year if:

(1) The carrier experiences incurred losses for a period of 2 years, on converted policies that have been in force for at least 1 year, which exceed earned premiums by more than 20 percent; and

(2) The amended premium rates are anticipated to produce a loss ratio of at least 120 percent.

D. Conditions pertaining to health status may not be an acceptable basis for classification for the purposes of this regulation.

E. The frequency of premium payment shall be the frequency customarily required by the carrier for the policy form and plan selected, provided that the carrier may not require premium payments less frequently than quarterly without the consent of the policyholder.