New Jersey Administrative Code
Title 11 - INSURANCE
Chapter 4 - ACTUARIAL SERVICES
Subchapter 6 - MINIMUM RESERVE STANDARDS FOR INDIVIDUAL AND GROUP HEALTH INSURANCE CONTRACTS
Section 11:4-6.4 - Claim reserves-minimum standards for claim reserves
Universal Citation: NJ Admin Code 11:4-6.4
Current through Register Vol. 56, No. 6, March 18, 2024
(a) The following applies to disability income:
1.
The maximum interest rate for claim reserves is specified in
11:4-6.1 6.
2. Minimum standards with respect to
morbidity are those specified in
11:4-6.1 4 and 6.15, except that,
at the option of the insurer:
i. For claims
with a duration from date of disablement of less than two years, reserves may
be based on the insurer's experience, if such experience is considered
credible, or upon other assumptions designed to place a sound value on the
liabilities.
ii. For group
disability income claims with a duration from date of disablement of more than
two years but less than five years, reserves may, with the approval of the
Commissioner, be based on the insurer's experience for which the insurer
maintains underwriting and claim administration control. The request for such
approval of a plan of modification to the reserve basis shall include:
(1) An analysis of the credibility of the
experience;
(2) A description of
how all of the insurer's experience is proposed to be used in setting
reserves;
(3) A description and
quantification of the margins to be included;
(4) A summary of the financial impact that
the proposed plan of modification would have had on the insurer's last filed
annual statement;
(5) A copy of the
approval of the proposed plan of modification by the Commissioner of the state
of domicile; and
(6) Any other
information deemed necessary by the Commissioner.
iii. For experience to be considered credible
for the purposes of this subsection, the company should be able to provide
claim termination patterns over no more than six years reflecting at least
5,000 claims terminations during the third through fifth claims durations on
reasonably similar applicable policy forms.
iv. For claims reserves to reflect sound
values and reasonable margins, reserve tables based on credible experience
should be adjusted regularly to maintain reasonable margins. Demonstrations may
be required.
3. For
contracts with an elimination period, the duration of disablement should be
measured as dating from the time that benefits would have begun to accrue had
there been no elimination period.
(b) The following applies to all other benefits:
1. The maximum interest rate for
claim reserves is specified in
11:4-6.1 6.
2. The reserve should be based on the
insurer's experience for morbidity or other contingency, if such experience is
considered credible, or upon other assumptions designed to place a sound value
on the liabilities.
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