Current through Register Vol. 63, No. 9, September 1, 2024
(1) This rule
applies to all long-term care insurance policies, certificates and riders
except those that are subject to OAR
836-052-0566 and
836-052-0676.
(2) Benefits under long-term care insurance
policies and riders shall be deemed reasonable in relation to premiums only if
the expected loss ratio is at least 60 percent and is calculated in a manner
providing for adequate reserving of the long-term care insurance
risk.
(3) In evaluating the
expected loss ratio under section (2) of this rule, an insurer shall consider
all relevant factors, including:
(a)
Statistical credibility of incurred claims experience and earned
premiums;
(b) The period for which
rates are computed to provide coverage;
(c) Experienced and projected
trends;
(d) Concentration of
experience within early policy duration;
(e) Expected claim fluctuation;
(f) Experience refunds, adjustments or
dividends;
(g) Renewability
features;
(h) All appropriate
expense factors;
(i)
Interest;
(j) Experimental nature
of the coverage;
(k) Policy
reserves;
(l) The mix of business
by risk classification;
(m) Product
features, such as long elimination periods, high deductibles and high maximum
limits.
(4) The loss
ratio requirements under this rule apply with respect to Oregon policyholders.
Subject to the approval of the Director, an insurer may use national or
regional loss ratio experience to modify the Oregon experience when the
experience for Oregon policyholders is small and statistically unreliable.
Oregon experience and national or regional experience must be submitted in
separate tables and the modification approved by the Director.
(5) The experience under all policy and rider
forms insuring a class of insureds with similar benefits and underwriting
requirements shall be combined when demonstrating compliance with the
requirements of this section.
(6)
The effect on loss ratios of all requirements necessary to qualify for benefits
shall be included in the calculations required under this rule.
(7) Sections (1) to (6) of this rule do not
apply to life insurance policies that accelerate benefits for long-term care. A
life insurance policy that funds long-term care benefits entirely by
accelerating the death benefit is considered to provide reasonable benefits in
relation to premiums paid if the policy complies with all of the following
provisions:
(a) The interest credited
internally to determine cash value accumulations, including long-term care, if
any, is guaranteed not to be less than the minimum guaranteed interest rate for
cash value accumulations without long-term care set forth in the
policy;
(b) The portion of the
policy that provides life insurance benefits meets the nonforfeiture
requirements of ORS 743.204 or
743.275;
(c) The policy or rider meets the disclosure
requirements of ORS 743.655(9) to
(11);
(d) Any life policy illustration meets the
applicable requirements of OAR
836-051-0500 to
836-051-0600; and
(e) An actuarial memorandum filed with the
Director must be submitted by a qualified actuary in good standing with the
American Academy of Actuaries. The memorandum must include:
(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 must
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 per
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 life
insurance policy, both for active lives and those in long-term care claim
status.
Stat. Auth.: ORS 731, 742 & 743
Stats. Implemented: ORS
742.005 &
743.655(1)(a)
