Current through Rules and Regulations filed through March 20, 2024
(1) This section shall apply as follows:
(a) Except as provided in paragraph (2), this
section applies to any long-term care policy or certificate issued in this
state on or after October 1, 2008.
(b) For certificates issued on or after the
effective date of this amended regulation under a group long-term care
insurance policy as defined in O.C.G.A. Section
33-42-4, which policy was in force
at the time this amended regulation became effective, the provisions of this
section shall apply on the policy anniversary following April 1,
2009.
(2) An insurer
shall provide notice of a pending premium rate schedule increase, including an
exceptional increase, to the Commissionerat least 90 days prior to the notice
to the policyholders and shall include:
(a)
Information required by Section
120-2-16-.09;
(b) Certification by a qualified actuary
that:
(i) If the requested premium rate
schedule increase is implemented and the underlying assumptions, which reflect
moderately adverse conditions, are realized, no further premium rate schedule
increases are anticipated;
(ii) The
premium rate filing is in compliance with the provisions of this
section;
(c) An
actuarial memorandum justifying the rate schedule change request that includes:
(i) Lifetime projections of earned premiums
and incurred claims based on the filed premium rate schedule increase; and the
method and assumptions used in determining the projected values, including
reflection of any assumptions that deviate from those used for pricing other
forms currently available for sale;
(A) Annual
values for the five years preceding and the three years following the valuation
date shall be provided separately;
(B) The projections shall include the
development of the lifetime loss ratio, unless the rate increase is an
exceptional increase;
(C) The
projections shall demonstrate compliance with subsection (3); and
(D) For exceptional increases,
(I) The projected experience should be
limited to the increases in claims expenses attributable to the approved
reasons for the exceptional increase; and
(II) In the event the Commissioner determines
as provided in Section
120-2-16-.04(1)(d)
that offsets may exist, the insurer shall use appropriate net projected
experience;
(ii) Disclosure of how reserves have been
incorporated in this rate increase whenever the rate increase will trigger
contingent benefit upon lapse;
(iii) Disclosure of the analysis performed to
determine why a rate adjustment is necessary, which pricing assumptions were
not realized and why, and what other actions taken by the company have been
relied on by the actuary;
(iv) A
statement that policy design, underwriting and claims adjudication practices
have been taken into consideration; and
(v) In the event that it is necessary to
maintain consistent premium rates for new certificates and certificates
receiving a rate increase, the insurer will need to file composite rates
reflecting projections of new certificates;
(d) A statement that renewal premium rate
schedules are not greater than new business premium rate schedules except for
differences attributable to benefits, unless sufficient justification is
provided to the Commissioner; and
(e) Sufficient information for review and
approval of the premium rate schedule increase by the Commissioner.
(3) All premium rate schedule
increases shall be determined in accordance with the following requirements:
(a) Exceptional increases shall provide that
70 percent of the present value of projected additional premiums from the
exceptional increase will be returned to policyholders in benefits;
(b) Premium rate schedule increases shall be
calculated such that the sum of the accumulated value of incurred claims,
without the inclusion of active life reserves, and the present value of future
projected incurred claims, without the inclusion of active life reserves, will
not be less than the sum of the following:
(i)
The accumulated value of the initial earned premium times 58 percent;
(ii) 85 percent of the accumulated value of
prior premium rate schedule increases on an earned basis;
(iii) The present value of future projected
initial earned premiums times 58 percent; and
(iv) 85 percent of the present value of
future projected premiums not in subparagraph (iii) on an earned
basis;
(c) In the event
that a policy form has both exceptional and other increases, the values in
subparagraphs (b)(ii) and (iv) will also include 70 percent for exceptional
rate increase amounts; and
(d) All
present and accumulated values used to determine rate increases shall use the
maximum valuation interest rate for contract reserves. The actuary shall
disclose as part of the actuarial memorandum the use of any appropriate
averages.
(4) For each
rate increase that is implemented, the insurer shall file for approval by the
Commissioner updated projections, as defined in subsection (2)(c)(i), annually
for the next three years and include a comparison of actual results to
projected values. The Commissioner may extend the period to greater than three
years if actual results are not consistent with projected values from prior
projections. For group insurance policies that meet the conditions in
subsection (11), the projections required by this subsection shall be provided
to the policyholder in lieu of filing with the Commissioner.
(5) If any premium rate in the revised
premium rate schedule is greater than 200 percent of the comparable rate in the
initial premium schedule, lifetime projections, as defined in subsection
(2)(c)(i), shall be filed for approval by the Commissioner every five years
following the end of the required period in subsection (4). For group insurance
policies that meet the conditions in subsection (11), the projections required
by this subsection shall be provided to the policyholder in lieu of filing with
the Commissioner.
(6)
(a) If the Commissioner has determined that
the actual experience following a rate increase does not adequately match the
projected experience and that the current projections under moderately adverse
conditions demonstrate that incurred claims will not exceed proportions of
premiums specified in subsection (3), the Commissioner may require the insurer
to implement any of the following:
(i) Premium
rate schedule adjustments; or
(ii)
Other measures to reduce the difference between the projected and actual
experience.
(b) In
determining whether the actual experience adequately matches the projected
experience, consideration should be given to Subsection (2)(c)(v) if
applicable.
(7) If the
majority of the policies or certificates to which the increase is applicable
are eligible for the contingent benefit upon lapse, the insurer shall file:
(a) A plan, subject to Commissioner approval,
for improved administration or claims processing designed to eliminate the
potential for further deterioration of the policy form requiring further
premium rate schedule increases, or both, or to demonstrate that appropriate
administration and claims processing have been implemented or are in effect;
otherwise the Commissioner may impose the condition in subsection (8) of this
section; and
(b) The original
anticipated lifetime loss ratio, and the premium rate schedule increase that
would have been calculated according to subsection (3) had the greater of the
original anticipated lifetime loss ratio or 58 percent been used in the
calculations described in subsection (3)(b)(i) and (iii).
(8)
(a) For
a rate increase filing that meets the following criteria, the Commissioner
shall review, for all policies included in the filing, the projected lapse
rates and past lapse rates during the 12 months following each increase to
determine if significant adverse lapsation has occurred or is anticipated:
(i) The rate increase is not the first rate
increase requested for the specific policy form or forms;
(ii) The rate increase is not an exceptional
increase; and
(iii) The majority of
the policies or certificates to which the increase is applicable are eligible
for the contingent benefit upon lapse.
(b) In the event significant adverse
lapsation has occurred, is anticipated in the filing or is evidenced in the
actual results as presented in the updated projections provided by the insurer
following the requested rate increase, the Commissioner may determine that a
rate spiral exists. Following the determination that a rate spiral exists, the
Commissioner may require the insurer to offer, without underwriting, to all in
force insureds subject to the rate increase the option to replace existing
coverage with one or more reasonably comparable products being offered by the
insurer or its affiliates.
(i) The offer
shall:
(A) Be subject to the approval of the
Commissioner;
(B) Be based on
actuarially sound principles, but not be based on attained age; and
(C) Provide that maximum benefits under any
new policy accepted by an insured shall be reduced by comparable benefits
already paid under the existing policy.
(ii) The insurer shall maintain the
experience of all the replacement insureds separate from the experience of
insureds originally issued the policy forms. In the event of a request for a
rate increase on the policy form, the rate increase shall be limited to the
lesser of:
(A) The maximum rate increase
determined based on the combined experience; and
(B) The maximum rate increase determined
based only on the experience of the insureds originally issued the form plus 10
percent.
(9) If the Commissioner determines that the
insurer has exhibited a persistent practice of filing inadequate initial
premium rates for long-term care insurance, the Commissioner may, in addition
to the provisions of subsection (8) of this section, prohibit the insurer from
either of the following:
(a) Filing and
marketing comparable coverage for a period of up to five years; or
(b) Offering all other similar coverages and
limiting marketing of new applications to the products subject to recent
premium rate schedule increases.
(10) Subsections (1) through (9) shall not
apply to policies for which the long-term care benefits provided by the policy
are incidental, as defined in Section
120-2-16-.04(2),
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
insurance benefits other than long-term care coverage meets the nonforfeiture
requirements as applicable in any of the following:
(i) O.C.G.A. Section
33-10-13for Life Insurance or
Annuities; or
(ii) O.C.G.A. Section
33-11-66(i) for
Variable Annuities.
(c)
The policy meets the disclosure requirements of O.C.G.A. Section
33-42-6;
(d) An actuarial memorandum is filed with the
Georgia 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 must 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 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
(viii) A description of the effect of the
long-term care policy provision on the required premiums, nonforfeiture values
and reserves on the underlying insurance policy, both for active lives and
those in long-term care claim status.
(11) Subsections (6) and (8) shall not apply
to group insurance policies as defined in Section O.C.G.A. Section
33-42-4where:
(a) The policies insure 250 or more persons
and the policyholder has 5,000 or more eligible employees of a single employer;
or
(b) The policyholder, and not
the certificateholders, pays a material portion of the premium, which shall not
be less than twenty percent (20%) of the total premium for the group in the
calendar year prior to the year a rate increase is filed.
O.C.G.A. Secs.
33-2-9,
33-42-6,
33-42-7,
49-4-164,
49-4-165.