USL&H Response to the HHS Rate Increase Review for the State of Arizona

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United Security Life and Health Insurance Company, (USL&H) is providing a brief response to the April 16, 2012, statement by the Department of Health and Human Services (HHS) that the individual rate increase in Arizona is unreasonable and unjustified.

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We price our products responsibly and competitively and we have the actuarial support to justify the increases we submitted.

There does seem to be some confusion regarding the size of our company, as it is being reported that “the recently announced rate hikes affect about 60,000 individual and small group insurance customers in Arizona, Louisiana, Missouri, Montana, Nebraska and Wyoming.” USL&H is a small regional health insurance carrier which only has 292 active major medical policies in the state of Arizona. The HHS decision for USL&H only applies to our rate actions for the state of Arizona. (USL&H is not licensed in the states of Louisiana, Montana or Wyoming).

USL&H has been in business since 1973 and has been writing Major Medical insurance since 1990, offering 8 major medical plans across 6 states. We have always viewed ourselves as an alternative to the larger insurance companies and pride ourselves on excellent service, competitive pricing and attractive benefits. Although our submitted rate actions may be higher than the new minimum standard, it does not mean that our rates are unreasonable or that they are higher than the competition.

We do not have the economies of scale as some of our larger competitors and consequently, we need to put through increases which help to spread the risk in the event of a large dollar claim. We price our products responsibly and competitively and we have the actuarial support to justify the increases we submitted. Due to our size, it would only take one or two large claims, e.g., a premature child birth, a heart or lung transplant, to put us at risk for a loss ratio exceeding 100%.

Milliman, a nationally recognized actuarial firm, has recently submitted a letter to HHS on behalf of United Security discussing the need for small companies like USL&H, to be able to pool large dollar claims over their entire block of business across all states for MLR, minimum loss ratio, reporting. Jim O’Connor, Principal and Consulting Actuary, states in this letter, “A state experiencing large claims in one year may not be the same state that experiences the large claims the next. These occurrences are not very predictable within a given state and calendar year for a small block of business. While the MLR allowed credibility adjustments address this in part, they do not offer complete protection from disproportionate distributions of large claims for small carriers.” We are still awaiting a response to this request.

We fully intend to work closely with the HHS over the next several days to resolve this issue.

For more information on United Security Life and Health Insurance Company please visit the company's website at

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