3 AAC 28.557 - Initial filing requirements

(a) This section applies to a long-term care policy issued in this state on or after January 1, 2023.

(b) An insurer shall provide to the director 45 days before making a long-term care insurance form available for sale the following information:

(1) a copy of the disclosure documents required in 3 AAC 28.556;

(2) an actuarial certification consisting of at least the following:

(A) a statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of foe form with no future premium increases anticipated;

(B) a statement that the policy design and coverage provided have been reviewed and taken into consideration,

(C) a statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration:

(D) a statement, as follows that the premiums include at least the minimum margin set out in (i) of this subparagraph or the specification of and justification for a lower margin as required by (ii) of this subparagraph:

(i) a composite margin for moderately adverse experience may not be less than 10 percent of lifetime claims;

(ii) a composite margin for moderately adverse experience that is less than 10 percent may be justified in uncommon circumstances; the proposed amount, full justification of the proposed amount and methods to monitor developing experience that would be the basis for withdrawal of approval for the lower margins must be submitted;

(iii) a composite margin for moderately adverse experience lower than otherwise considered appropriate for the standalone long-term care policy may be justified for long-term care benefits provided through a life policy or an annuity contract; the lower composite margin, if utilized, shall be justified by appropriate actuarial demonstration addressing margins and volatility when considering the entirety of the product;

(iv) a greater margin may be appropriate in circumstances where the company has less credible experience to support its assumptions used to determine the premium rates;

(v) for purposes of this subparagraph, a composite margin is the total of all margins reflected in actuarial assumptions, such as morbidity, mortality, lapse, underwriting selection wear-off, and over best estimate assumptions.

(E) a statement that the premium rate schedule is not less than the premium rate schedule for existing similar policy forms also available from the insurer except for reasonable differences attributable to benefits; or a comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences;

(F) a statement that reserve requirements have been reviewed and considered; Support for this statement shall include

(i) sufficient detail or sample calculations provided so as to have a complete depiction of the reserve amounts to be held; and

(ii) a statement that the difference between the gross premium and the net valuation premium for renewal years is sufficient to cover expected renewal expenses; or if a statement cannot be made, a complete description of the situations where this does not occur; an aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship; and

(3) an actuarial memorandum prepared, dated and signed by a member of the Academy of Actuaries; the memorandum address and support each specific item required as part of the actuarial certification and provide at least the following information:

(A) an explanation of the review performed by the actuary before making the statements in (2)(B) and (C) of this subsection;

(B) a complete description of pricing assumptions;

(C) sources and levels of margins incorporated into the gross premiums that are the basis for the statement in (2)(A) of this subsection of the actuarial certification and an explanation of the analysis and testing performed in determining the sufficiency of the margin; deviations in margins between ages, sexes, plans, or states shall be clearly described; deviations in margins required to be described are other than those produced utilizing generally accepted actuarial methods for smoothing and interpolating gross premium scales; and

(D) a demonstration that the gross premiums include the minimum composite margin specified in (2)(D) of this subsection.

(c) In a review of the actuarial certification and actuarial memorandum, the director may request review by an actuary with experience in long-term care pricing who is independent of the company. If the director asks for additional information as a result of a review, the period in (b) of this section does not include the period during which the insurer is preparing the requested information.

Notes

3 AAC 28.557

Eff. 3/27/2022, Register 241, April 2022

Authority:AS 21.06.090

AS 21.53.020

AS 21.53.030

AS 21.53.050

AS 21.53.090