Current through Register Vol. 63, No. 9, September 1, 2024
(1)
(a)
Except as provided in subsection (b) of this section, this rule applies to any
long-term care insurance policy issued in this state on or after March 1, 2006.
(b) Sections (2)(b)(D) and (3) of
this rule apply to any long-term care policy issued in this state on or after
January 1, 2016.
(2) An
insurer shall provide the following information to the Director for prior
approval before making a long-term care insurance form available for sale:
(a) A copy of the disclosure documents
required in OAR 836-052-0556; and
(b) 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
subparagraph (i) of this paragraph or the specification of and justification
for a lower margin as required by subparagraph (ii) of this paragraph.
(i) A composite margin shall not be less than
10 percent of lifetime claims.
(ii) A composite margin that is less than 10
percent 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 that is 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. Such lower composite
margin, if used, 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 where the company has less credible experience to
support its assumptions used to determine the premium rates.
(E)
(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 provided so as to have 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 insurer must
include an actuarial memorandum prepared, dated and signed by a member of the
Academy of Actuaries. The actuarial memorandum shall address and support each
specific item required as part of the actuarial certification and provide at a
minimum all of the following information:
(a)
An explanation of the review performed by the actuary prior to making the
statements in section (2)(b)(B) and (C) of this rule.
(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 the actuarial certification required by section (2)(b)(A) of
this rule 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.
(d) A demonstration that
the gross premiums include the minimum composite margin specified in section
(2)(b)(D) of this rule.
(4) An insurer shall provide an actuarial
demonstration showing that benefits are reasonable in relation to premiums. The
actuarial demonstration shall include either premium and claims experience on
similar policy forms adjusted for any premium and benefit differences, or
relevant and credible data from other studies, or both.
(5) In any review of the actuarial
certification and actuarial memorandum, the Director may request review by an
actuary with experience in long-term care pricing who is independent of the
company.
Stat. Auth.: ORS
731.244,
742.023,
743.013,
743.655,
743.656 &
746.240
Stats. Implemented: ORS
731.244,
742.003,
742.005,
742.009,
743.010(3),
743.013(3),
743.650,
743.653,
743.655,
743.656 &
746.240
