Current through Register No. 12, March 21, 2024
(a) This section
shall apply to all requests for premium rate schedule increases.
(b) An insurer shall provide notice of a
pending premium rate schedule increase, including an exceptional increase, to
the commissioner at least 30 days prior to the notice to the policyholders and
shall include:
(1) Information required by
Ins
3601.08;
(2) Certification by a qualified actuary
that:
a.If the requested premium rate schedule
increase is implemented and the underlying assumptions are realized, then no
further premium rate schedule increases are anticipated;
b. The premium rate filing is in compliance
with the provisions of this section;
(3) An actuarial memorandum justifying the
rate schedule change request that includes:
a. 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;
1. Annual
values for the 5 years preceding the 3 years following the valuation date shall
be provided separately;
2. The
projections shall include the development of the lifetime loss ratio;
3. The projections shall demonstrate
compliance with subsection (c); and
4. 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
Ins
3601.03(a)(4) that offsets may exist,
the insurer shall use appropriate net projected experience;
b. Disclosure of how
reserves have been incorporated in this rate increase whenever the rate
increase will trigger contingent benefit upon lapse;
c. 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;
d. A
statement that policy design, underwriting and claims adjudication practices
have been taken into consideration; and
e. 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;
(4) 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;
(5)
Sufficient information for review and approval of the premium rate schedule
increase by the commissioner; and
(6) In assessing the reasonableness of the
assumptions proposed, the commissioner may use the services of an independent
actuary and may charge the insurer for the cost of these services. The
commissioner may also accept a review done by or for another state or states
for the same or substantially the same policy form where any differences in
benefits and premiums are not material and such review was completed within 18
months of the date of the premium rate schedule filing and substantially
complies with these standards.
(c) All premium rate schedule increases shall
be determined in accordance with the following requirements:
(1) 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;
(2) 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:
a.
For policies issued on or after May 1, 2004:
1. The accumulated value of the initial
earned premium times the difference between 2 percent and the greater of the
original anticipated loss ratio when the product was originally filed and 60
percent.;
2. Eighty-five percent of
the accumulated value of prior premium rate schedule increases on an earned
basis;
3. The present value of
future projected initial earned premiums times the difference between 2 percent
and the greater of the original anticipated loss ratio when the product was
originally filed and 60 percent; and
4. Eighty-five percent of the present value
of future projected premiums not in subparagraph 3. on an earned
basis;
b. For policies
issued prior to May 1, 2004:
1. The
accumulated value of earned premium, using rates that had been approved and
implemented prior to January 1, 2016, times the difference between 2 percent
and the greater of the original anticipated loss ratio when the product was
originally filed and 62 percent;
2.
Eighty percent for individual policies and 75 percent for group policies of the
accumulated value of premium rate increases approved and proposed for
implementation on or after January 1, 2016;
3. The present value of future projected
earned premium using rates that had been approved and implemented prior to
January 1, 2016, times the difference between 2 percent and the greater of the
original anticipated loss ratio when the product was originally filed and 62
percent; and
4. Eighty percent for
individual policies and 75 percent for group policies of the present value of
future projected premiums not in subparagraph 3. on an earned basis;
(3) In the event that a
policy form has both exceptional and other increases, the values in paragraph
(2) b. and d. will also include 70 percent for exceptional rate increase
amounts;
(4) 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;
(5) All calculated accumulated values shall
use the actual experience of the product, except for the interest rate as
specified in (4), in as close a manner to that used in the original development
of rates as possible. This shall not preclude the inclusion of multiple policy
forms into one rate increase determination if such pooling enhances the
credibility of the combined accumulated experience; and
(6) All calculated present values shall use
reasonable estimates of future premium payments and claim payments. Such
estimates shall be based on reasonable assumptions, which may include a margin
for moderately adverse experience, as characterized herein.
(d) For any single increase
approved, at the requested amount and based on the actuarial assumptions
pursuant to (b) above, the insurer shall not be permitted to implement any
further increases on the subject policy for a period of 3 years following the
date the approved increase was implemented and no increase shall be implemented
for a period of 3 years following the issue date.
(e) For any increase that is greater than
20%, the insurer shall be required to implement a series of scheduled increases
to ensure that no policyholder will realize an annual rate increase of more
than 20%. The entire scheduled series, or methodology for establishing a
series, shall be approved as part of the rate filing justifying the premium
rate schedule increase. For the purposes of
Ins
3601.08(e), any schedule series
implemented pursuant to this paragraph shall be considered one premium rate
schedule increase. The insurer shall not be permitted to implement any further
increases on the subject policy during the period of such scheduled increases.
The insurer shall not be permitted to implement any further increases within a
period of 3 years following the date the first approved scheduled increase was
implemented.
(f) The commissioner
shall not approve any increase if the resultant increase results in a
percentage increase for any policyholder that exceeds an amount as set forth
below based on the policyholder's attained age:
Table 3601.1
Maximum Permitted
|
Attained Age
|
Increase
|
|
Under 50
|
50%
|
|
50
|
50%
|
|
51
|
50%
|
|
52
|
50%
|
|
53
|
50%
|
|
54
|
50%
|
|
55
|
50%
|
|
56
|
50%
|
|
57
|
50%
|
|
58
|
50%
|
|
59
|
50%
|
|
60
|
50%
|
|
61
|
50%
|
|
62
|
50%
|
|
63
|
50%
|
|
64
|
50%
|
|
65
|
50%
|
|
66
|
50%
|
|
67
|
50%
|
|
68
|
50%
|
|
69
|
50%
|
|
70
|
50%
|
|
71
|
48%
|
|
72
|
46%
|
|
73
|
44%
|
|
74
|
42%
|
|
75
|
40%
|
|
76
|
38%
|
|
77
|
36%
|
|
78
|
34%
|
|
79
|
32%
|
|
80
|
30%
|
|
81
|
28%
|
|
82
|
26%
|
|
83
|
24%
|
|
84
|
22%
|
|
85
|
20%
|
|
86
|
18%
|
|
87
|
16%
|
|
88
|
14%
|
|
89
|
12%
|
|
90
|
10%
|
|
Over 90
|
10%
|
(g)
For each rate increase that is implemented, the insurer shall file for review
by the commissioner updated projections, as defined in (b) (3) a., annually for
the next 3 years and include a comparison of actual results to projected
values. The commissioner may extend the period to greater than 3 years if
actual results are not consistent with projected values from prior projections.
For group insurance policies that meet the conditions in subsection (n), the
projections required by this subsection shall be provided to the policyholder
in lieu of filing with the commissioner.
(h) 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
(b)(3)a., shall be filed for review by the commissioner every 5 years following
the end of the required period in subsection (g). For group insurance policies
that meet the conditions in subsection (n), the projections required by this
subsection shall be provided to the policyholder in lieu of filing with the
commissioner.
(i)
(1) 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 demonstrate that incurred
claims will not exceed proportions of premiums specified in subsection (c), the
commissioner may require the insurer to implement any of the following:
a. Premium rate schedule adjustments;
or
b. Other measures to reduce the
difference between the projected and actual experience.
(2) In determining whether the actual
experience adequately matches the projected experience, consideration should be
given to subsection (b)(3)e., if applicable.
(j) 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:
(1) 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 (k) of this
section; and
(2) The original
anticipated lifetime loss ratio, and the premium rate schedule increase that
would have been calculated according to subsection (c) had the greater of the
original anticipated lifetime loss ratio or 58 percent been used in the
calculations described in subsection (c)(2)a. and c.
(k)
(1) 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:
a. The rate increase is not the first rate
increase requested for the specific policy form or forms;
b. The rate increase is not an exceptional
increase; and
c. The majority of
the policies or certificates to which the increase is applicable are eligible
for the contingent benefit upon lapse.
(2) 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.
a. The offer
shall:
1. Be subject to the approval of the
commissioner;
2. Be based on
actuarially sound principles, but not be based on attained age; and
3. Provide that maximum benefits under any
new policy accepted by an insured shall be reduced by comparable benefits
already paid under the existing policy.
b. 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:
1. The maximum rate increase determined
based on the combined experience; and
2. The maximum rate increase determined based
only on the experience of the insureds originally issued the form plus 10
percent.
(l) 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 (k) of this section, prohibit the insurer from
either of the following:
(1) Filing and
marketing comparable coverage for a period of up to 5 years; or
(2) Offering all other similar coverages and
limiting marketing of new applications to the products subject to recent
premium rate schedule increases.
(m) Subsections (a) through (l) shall not
apply to policies for which the long-term care benefits provided by the policy
are incidental, as defined in
Ins
3601.03(b), if the policy complies
with all of the following provisions:
(1) The
interest credited internally to determine cash value accumulations, including
long-term care, if any, rate guaranteed not to be less than the minimum
guaranteed interest rate for cash value accumulations without long-term care
set forth in the policy;
(2) 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:
a. RSA 409; and
b. RSA 409-A;
(3) The policy meets the disclosure
requirements of
RSA
415-D:8VI., VII., and
VIII.;
(4) The portion of the
policy that provides insurance benefits other than long-term care coverage
meets the requirements as applicable in policy illustrations as required by Ins
309;
(5) An actuarial memorandum is
filed with the insurance department that includes:
a. A description of the basis on which the
long-term care rates were determined;
b. A description of the basis for the
reserves;
c. A summary of the type
of policy, benefits, renewability, general marketing method, and limits on ages
of issuance;
d. A description and a
table of each actuarial assumption used. For expenses, an insurer shall include
percent of premium dollars per policy and dollars per unit of benefits, if
any;
e. A description and a table
of the anticipated policy reserves and additional reserves to be held in each
future year for active lives;
f.
The estimated average annual premium policy and the average issue
age;
g. 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
h. 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 status.
(n) Subsections (h) and (k) shall not apply
to group insurance policies as defined in
RSA
415-D:3IV. (a) where:
(1) The policies insure 250 or more persons
and the policyholder has 5,000 or more eligible employees of a single employer;
or
(2) The policyholder, and not
the certificate holders, pays a material portion of the premium, which shall
not be less than 20 percent of the total premium for the group in the calendar
year prior to the year a rate increase is filed.
#8036, eff 5-1-04; ss by #10154, eff
6-25-12
