Ariz. Admin. Code § R20-6-1013 - Loss Ratio
A. This
Section applies to policies and certificates issued any time prior to May 10,
2005.
B. Benefits under an
individual long-term care insurance policy are deemed reasonable in relation to
premiums if the expected loss ratio is at least 60% calculated in a manner that
provides for adequate reserving of the long-term care insurance risk. In
evaluating the expected loss ratio, the director shall consider all relevant
factors, including:
1. Statistical
credibility of incurred claims experience and earned premiums;
2. The period for which rates are computed to
provide coverage;
3. Experienced
and projected trends;
4.
Concentration of experience within early policy duration;
5. Expected claim fluctuation;
6. Experience refunds, adjustments, or
dividends;
7. Renewability
features;
8. All appropriate
expense factors;
9.
Interest;
10. Experimental nature
of the coverage;
11. Policy
reserves;
12. Mix of business by
risk classification; and
13.
Product features such as long elimination periods, high deductibles, and high
maximum limits.
C. A
premium rate schedule or proposed revision to a premium rate schedule that is
expected to produce, over the lifetime of the long-term care insurance policy,
benefits that are less than 60% of the proposed premium rate schedule is deemed
to be unreasonable.
D. Subsections
(B) and (C) do 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 deemed to provide reasonable
benefits in relation to premiums paid if the policy complies with all of the
following:
1. The interest credited internally
to determine cash value accumulations, including long-term care, if any, is
guaranteed not to be less than the minimum guaranteed interest rate for cash
value accumulations without long-term care set forth in the policy;
2. The portion of the policy that provides
life insurance benefits complies with the nonforfeiture requirements of A.R.S.
§
20-1231;
3. The policy complies with the disclosure
requirements of A.R.S. §
20-1691.06(A) through (E);
4. At the time of making a filing under
A.R.S. §
20-1691.08,
the insurer files an actuarial memorandum that includes the following
information:
a. A description of the basis on
which the long-term care rates were determined;
b. A description of the basis for the
reserves;
c. A summary of the type
of policy, benefits, renewability, general marketing method, and limits on ages
of issuance;
d. A description and a
table of each actuarial assumption used; for expenses, an insurer shall include
percent of premium dollars per policy and dollars per unit of benefits, if
any;
e. A description and a table
of the anticipated policy reserves and additional reserves to be held in each
future year for active lives;
f.
The estimated average annual premium per policy and the average issue
age;
g. A statement as to whether
underwriting is performed, including:
i. Time
of underwriting;
ii. A description
of the type of underwriting used, such as medical underwriting or functional
assessment underwriting; and
iii.
For a group policy, whether an enrollee's dependents are subject to
underwriting; and
h. A
description of the effect of the long-term care policy provisions on the
required premiums, nonforfeiture values, and reserves on the underlying life
insurance policy, both for active lives and those in long-term care claim
status.
Notes
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