Code of Maine Rules
02 - DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION
031 - BUREAU OF INSURANCE
Chapter 425 - LONG-TERM CARE INSURANCE
Section 031-425-10 - Initial Rate Filing with Superintendent
Universal Citation: 02 ME Code Rules ยง 031-425-10
Current through 2024-38, September 18, 2024
A. This section applies to any long-term care policy issued in this state on or after October 1, 2004, except that Subsection B(2)(d), Subsection B(2)(f), and Subsection B(3) apply only to policies issued on or after July 1, 2022.
B. At least 30 days before making a long-term care insurance form available for sale, an insurer shall provide the superintendent with the following information:
(1) A copy of the disclosure documents
required under Section
9; and
(2) A certification by a qualified actuary
consisting of at least:
(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 increase 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 a
margin for moderately adverse experience that is not less than 10% of lifetime
claims, or a justification for a lower margin meeting the requirements of
clause (i):
(i) A composite margin that is
less than 10% may be justified for long-term care benefits provided through a
life insurance policy or annuity contract rather than a stand-alone long-term
care policy, or in other extraordinary circumstances. The actuarial
certification must include the proposed amount, full justification of the
proposed amount, and methods to monitor developing experience to evaluate the
validity of the lower margin on an ongoing basis. For products that combine
long-term care with other types of benefits, the justification shall address
margins and volatility for the entirety of the product.
(ii) A greater margin may be appropriate in
circumstances where the company lacks sufficient credible experience to support
the assumptions used to determine its premium rates, or for participating
policies where policyholders receive distributions based on favorable claims
experience.
(e) 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 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
to 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) The rate filing shall include an
actuarial memorandum prepared, dated and signed by the certifying actuary. The
memorandum shall address and support each specific item required as part of the
actuarial certification and provide at least the following information:
(a) An explanation of the review performed by
the actuary before making the statements required by Paragraph (2)(b) and
(c).
(b) A complete description of
pricing assumptions; and
(c)
Sources and levels of margins incorporated into the gross premiums that are the
basis for the statement required by Paragraph (2)(a) 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. De minimis variations resulting from actuarial
methods for smoothing and interpolating gross premium scales are not considered
"deviations" for purposes of this subparagraph.
(d) A demonstration that the gross premiums
include the minimum composite margin specified in Paragraph (2)(d).
C.
(1) The superintendent may request an
actuarial demonstration that benefits are reasonable in relation to premiums.
The actuarial demonstration shall include either premium and claim experience
on similar policy forms, adjusted for any premium or benefit difference,
relevant and credible data from other studies, or both.
(2) In the event the superintendent asks for
such additional information, the 30-day period of Section 10(B) shall begin
when an insurer provides the additional requested information.
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