210 Neb. Admin. Code, ch. 46, § 017

Current through September 17, 2024

Section 210-46-017 - Loss Ratio

017.01 Benefits under long-term care insurance policies shall be deemed 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 shall be given to all relevant factors, including:

017.01(A) Statistical credibility of incurred claims experience and earned premiums;

017.01(B) The period for which rates are computed to provide coverage;

017.01(C) Experienced and projected trends;

017.01(D) Concentration of experience within early policy duration;

017.01(E) Expected claim fluctuation;

017.01(F) Experience refunds, adjustments or dividends;

017.01(G) Renewability features;

017.01(H) All appropriate expense factors;

017.01(I) Interest;

017.01(J) Experimental nature of the coverage;

017.01(K) Policy reserves;

017.01(L) Mix of business by risk classification; and

017.01(M) Product features such as long elimination periods, high deductibles and high maximum limits.

017.02 Subsection 017.01 shall not 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:

017.02(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;

017.02(B) The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of Neb.Rev.Stat. § 44-407.01;

017.02(C) The policy meets the disclosure requirements of Neb.Rev.Stat. § 44-4516(4),(5), and § 44-4517 of the Long-Term Care Insurance Act;

017.02(D) Any policy illustration that meets the applicable requirements of the Life Insurance Illustrations Regulation; and

017.02(E) An actuarial memorandum is filed with the insurance department that includes:

017.02(E)(1) A description of the basis on which the long-term care rates were determined;

017.02(E)(2) A description of the basis for the reserves;

017.02(E)(3) A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;

017.02(E)(4) A description and a table of each actuarial assumption used. For expenses, an insurer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

017.02(E)(5) A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

017.02(E)(6) The estimated average annual premium per policy and the average issue age;

017.02(E)(7) A statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and

017.02(E)(8) A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying life insurance policy, both for active lives and those in long-term care claims status.

210 Neb. Admin. Code, ch. 46, § 017