Idaho Admin. Code r. 18.04.11.023

Current through September 2, 2024

Section 18.04.11.023 - LOSS RATIO

Section 023 applies to all (group and individual) long-term care insurance policies or certificates except those covered under Sections 024 and 025 of this chapter.

01.Expected Loss Ratios. Benefits under long-term care insurance policies are reasonable in relation to premiums provided the expected loss ratio is at least sixty percent (60%), calculated in a manner which provides for adequate reserving of the long-term care insurance risk. In evaluating the expected loss ratio, due consideration is given to all relevant factors, including:

a. Statistical credibility of incurred claims experience and earned premiums;

b. The period for which rates are computed to provide coverage;

c. Experienced and projected trends;

d. Concentration of experience within early policy duration;

e. Expected claim fluctuation;

f. Experience refunds, adjustments or dividends;

g. Renewability features;

h. All appropriate expense factors;

i. Interest;

j. Experimental nature of the coverage;

k. Policy reserves;

l. Mix of business by risk classification; and

m. Product features such as long elimination periods, high deductibles and high maximum limits.

02.Policies That Accelerate Benefits. Subsection 023.01 cannot apply to life insurance policies that accelerate benefits for long-term care. A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy complies with all of the following provisions:

a. The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;

b. The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of Section 41-1927, Idaho Code, Standard Nonforfeiture Law - Life Insurance.

c. The policy meets the disclosure requirements of Sections 41-4605(9), 41-4605(10), and 41-4605(11), Idaho Code.

i. Any policy illustration that meets the applicable requirements of the NAIC Life Insurance Illustrations Model Regulation.

d. An actuarial memorandum is filed with the insurance department that includes:

i. A description of the basis on which the long-term care rates were determined;

ii. A description of the basis for the reserves;

iii. A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;

iv. A description and a table of each actuarial assumption used. For expenses, an insurer will include percent of premium dollars per policy and dollars per unit of benefits, if any;

v. A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

vi. The estimated average annual premium per policy and the average issue age;

vii. A statement as to whether underwriting is performed at the time of application. The statement indicates whether underwriting is used and, if used, the statement includes a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement indicates whether the enrollee or any dependent will be underwritten and when underwriting occurs; and

viii. A description of the effect of the long-term care policy provision on the prescribed premiums, nonforfeiture values and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status.

Idaho Admin. Code r. 18.04.11.023

Effective March 31, 2022