FARGO (AP) - Blue Cross Blue Shield of North Dakota says it may face an underwriting loss of about $22 million - the largest in 10 years - when its fiscal year ends Dec. 31. The loss represents the difference between premiums it collected and claims expenses paid.

Blues Chief Executive Officer Mike Unhjem said the state's largest private insurer had budgeted for an underwriting loss of $15 million but claims have been rising faster than expected.

The projected loss is "not a crisis … but it's serious," he said.

Insurance companies have other sources of income, primarily from investments. But Unhjem said the loss might force the insurer might be forced to trim reimbursements to health care providers.

Blues executives met Wednesday with representatives of the state's largest health systems - MeritCare in Fargo, Altru in Grand Forks, and Medcenter One and St. Alexius in Bismarck.

Blues spokeswoman Denise Kolpack said the underwriting projections are not final and no decisions have been made.

"We truly are still analyzing all the numbers," she said Friday.

Blue Cross Blue Shield of North Dakota budgeted for health care inflation of 9.5 percent, but costs have been rising by more than 11 percent over the past year, Unhjem said.

Last year, the Blues sought a 17.3 percent increase in premiums for individuals. The state Insurance Department approved a 9.9 percent increase for the fully insured group rate.

In 1998, Blue Cross Blue Shield of North Dakota reported an underwriting loss of nearly $27 million. The insurer responded then with a hiring freeze, and 57 employees took an early retirement option, Kolpack said. The Blues also reduced reimbursements to health care providers by a little less than 1 percent, and imposed a 6.3 percent rate increase, she said. Forty-five jobs were cut but 35 of the workers in those jobs were able to transfer within the system.

"This time, we are recognizing these trends earlier so we can take corrective action earlier. In 1998, it was pretty late in the year when we knew the numbers," Kolpack said.

Unhjem said hospital officials have said cuts in reimbursements could force them to cut services in already tough financial times.

"That was the message that we got loud and clear," he said.