Illinois Administrative Code
Title 50 - INSURANCE
Part 2004 - ACCIDENT AND HEALTH RESERVES
Section 2004.40 - Claim Reserves - Present Value of Amounts Not Yet Due on Claims
Universal Citation: 50 IL Admin Code ยง 2004.40
Current through Register Vol. 48, No. 12, March 22, 2024
a) General (Also called "Disabled Life Reserves" in the case of insurance providing loss-of-time benefits for disability due to accident or sickness) Reserves are required for claims on all health insurance policies, group and individual in Section 2004.20(b) providing benefits for continuing loss, such as loss-of-time or hospitalization.
b) Claim reserve standards for total disability due to accident or sickness
1)
Interest. The maximum interest rate for reserves shall be 31/2% compounded
annually.
2) Morbidity. The reserve
shall be established in accordance with the 1964 Commissioners Disability
Table, except that for unreported claims and resisted claims and, at the option
of the company, claims with a duration of disablement of less than two years,
reserves may be based on the individual company's experience or other
assumptions designed to place a sound value on the liabilities. Reserves based
on such experience or assumptions shall be verified by the development of each
year's claims over a period of years.
3) For policies with an elimination period,
the duration of disablement shall be considered as dating from the time that
benefits would have begun to accrue had there been no elimination
period.
4) A new disability
connected with a previous disability which had a duration of at least one year
and terminated within six months of the new disability shall be considered a
continuation of the previous disability.
c) Reserve standards for all other claim reserves
1) Interest. The maximum interest
rate for reserves shall be 31/2% compounded annually.
2) Morbidity or other contingency. The
reserve shall be based on the individual company's experience or other
assumptions designed to place a sound value on the liabilities. The results
shall be verified by the development of each year's claims over a period of
years.
d) Valuation procedures
The company may employ suitable approximations and estimates, including but not limited to groupings and averages, in computing claim reserves.
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