Alabama Administrative Code
Title 482 - ALABAMA DEPARTMENT OF INSURANCE
Chapter 482-1-134 - HEALTH INSURANCE RESERVES
Section 482-1-134-.01 - Introduction
Universal Citation: AL Admin Code R 482-1-134-.01
Current through Register Vol. 43, No. 02, November 27, 2024
(1) Purpose and Scope.
(a) The purpose of this chapter is to
implement Chapter 36A of Title 27 of the Alabama Insurance Code, beginning with
Section 27-36A-1, Code of Ala.
1975.
(b) These
standards apply to all individual and group health (accident and sickness)
insurance coverages including single premium credit disability insurance. All
other credit insurance is not subject to this chapter.
(c) When an insurer determines that adequacy
of its health insurance reserves requires reserves in excess of the minimum
standards specified herein, such increased reserves shall be held and shall be
considered the minimum reserves for that insurer.
(d) With respect to any block of contracts,
or with respect to an insurer's health business as a whole, a prospective gross
premium valuation is the ultimate test of reserve adequacy as of a given
valuation date. Such a gross premium valuation will take into account, for
contracts in force, in a claims status, or in a continuation of benefits status
on the valuation date, the present value as of the valuation date of: all
expected benefits unpaid, all expected expenses unpaid, and all unearned or
expected premiums, adjusted for future premium increases reasonably expected to
be put into effect.
(e) Such a
gross premium valuation is to be performed whenever a significant doubt exists
as to reserve adequacy with respect to any major block of contracts, or with
respect to the insurer's health business as a whole. In the event inadequacy is
found to exist, immediate loss recognition shall be made and the reserves
restored to adequacy. Adequate reserves (inclusive of claim, premium and
contract reserves, if any) shall be held with respect to all contracts,
regardless of whether contract reserves are required for such contracts under
these standards.
(f) Whenever
minimum reserves, as defined in these standards, exceed reserve requirements as
determined by a prospective gross premium valuation, such minimum reserves
remain the minimum requirement under these standards.
(2) Categories of Reserves.
(a) The following rules set forth minimum
standards for three categories of health insurance reserves:
1. Rule
482-1-134-.02. Claim
Reserves.
2. Rule
482-1-134-.03. Premium
Reserves.
3. Rule
482-1-134-.04. Contract
Reserves.
(b) Adequacy
of an insurer's health insurance reserves is to be determined on the basis of
all three categories combined. However, these standards emphasize the
importance of determining appropriate reserves for each of the three categories
separately.
(3) Appendices. These standards contain two appendices which are an integral part of the standards, and one additional "supplementary" appendix which is not part of the standards as such, but is included for explanatory and illustrative purposes only.
(a) Appendix A. Specific
minimum standards with respect to morbidity, mortality and interest, which
apply to claim reserves according to year of incurral and to contract reserves
according to year of issue.
(b)
Appendix B. Glossary of Technical Terms Used.
(c) Appendix C. ( Supplementary) Waiver of
Premium Reserves.
Author: Commissioner of Insurance
Statutory Authority: Code of Ala. 1975, §§ 27-2-17, 27-36A-1, et al.
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