b) An insurer shall provide
the information listed in this subsection (b) to the Director 30 days prior to
making a long-term care insurance form available for sale.
1) A copy of the disclosure documents
required in Section
2012.62;
and
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 the 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 that
the premiums contain at least the minimum margin for moderately adverse
experience defined in subsection (b)(2)(D)(i) or the specification of and
justification for a lower margin as required by subsection (b)(2)(D)(ii).
i) A composite margin shall not be less than
10% of lifetime claims.
ii) A
composite margin that is less than 10% 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 such lower margins must be submitted.
iii) A composite margin lower than otherwise
considered appropriate for the stand-alone 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 in which the company has less credible experience to support its
assumptions used to determine the premium rates.
E) Either:
i) 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
ii) 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
that provide 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 such 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.
3) An actuarial memorandum prepared, dated
and signed by the member of the Academy of Actuaries shall be included and
shall address and support each specific item required as part of the actuarial
certification and shall provide at least the following information:
A) An explanation of the review performed by
the actuary prior to making the statements in subsections (b)(2)(B) and
(C);
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 subsection (b)(2)(A) of the actuarial certification and an
explanation of the analysis and testing performed in determining the
sufficiency of the margins. 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 subsection
(b)(2)(D).