New Jersey Administrative Code
Title 11 - INSURANCE
Chapter 4 - ACTUARIAL SERVICES
Subchapter 6 - MINIMUM RESERVE STANDARDS FOR INDIVIDUAL AND GROUP HEALTH INSURANCE CONTRACTS
Section 11:4-6.1 - Purpose and scope

(a) This subchapter applies to all insurers authorized to write health insurance in this State. These standards apply to all individual and group health insurance coverages issued prior to January 1, 2017. Reserve standards for such coverages issued prior to January 1, 2017, including claims incurred on and after January 1, 2017, on those policies, shall follow the requirements in the NAIC Accounting Practices and Procedures Manual (APPM), Appendix A, A-010. Reserve standards for such coverages issued prior to January 1, 2017, for claims incurred prior to January 1, 2017, but which are still open claims on or after January 1, 2017, shall follow applicable requirements for such open claims in the APPM, Appendix A, A-010. For all such coverages issued on and after January 1, 2017, the standards and reserve requirements provided in the Valuation Manual shall apply. These standards do not apply to credit insurance.

(b) When an insurer determines that adequacy of its health insurance reserves requires reserves in excess of the minimum standards specified in this subchapter, such increased reserves shall be held and shall be considered the minimum reserves for that insurer.

(c) With respect to any block of contracts, or with respect to an insurer's health business as a whole, a prospective gross premium valuation is an important test of reserve adequacy as of a given valuation date. Such a gross premium valuation will take into account, for contracts in force, in a claims status, or in a continuation of benefits status on the valuation date, the present value as of the valuation date of: all expected benefits unpaid, all expected expenses unpaid, and all unearned or expected premiums, adjusted for future premium increases reasonably expected to be put into effect.

(d) Such a gross premium valuation is to be performed whenever a significant doubt exists as to reserve adequacy with respect to any major block of contracts, or with respect to the insurer's health business as a whole. In the event inadequacy is found to exist, immediate loss recognition shall be made and the reserves restored to adequacy. Adequate reserves (inclusive of claim, premium and contract reserves, if any) shall be held with respect to all contracts, regardless of whether contract reserves are required for such contracts under these standards.

(e) Whenever minimum reserves, as defined in these standards, exceed reserve requirements as determined by a prospective gross premium valuation, such minimum reserves remain the minimum requirement under these standards.

(f) The following subchapter sets forth minimum standards for three categories of health insurance reserves:

(g) Adequacy of an insurer's health insurance reserves is to be determined on the basis of all three categories combined. However, these standards emphasize the importance of determining appropriate reserves for each of the three categories separately.