Virginia Administrative Code
Title 14 - INSURANCE
Agency 5 - STATE CORPORATION COMMISSION, BUREAU OF INSURANCE
Chapter 200 - RULES GOVERNING LONG-TERM CARE INSURENCE
Section 14VAC5-200-77 - Initial filing requirements
Universal Citation: 4 VA Admin Code 5-200-77
Current through Register Vol. 41, No. 3, September 23, 2024
A. This section shall apply to any long-term care policy form filed with the commission on or after September 1, 2015 .
B. An insurer shall provide the information listed in this section to the commission and receive approval of the form prior to making a long-term care insurance form available for sale.
1. A copy of the disclosure documents
required in
14VAC5-200-75; and
2. 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.
An explanation for supporting subdivision 2 a of this subsection, including (i)
a description of the margin for moderately adverse experience that is included
in the premium rates and (ii) a description of the testing of pricing
assumptions that was done to support the conclusion that the filed premium
rates are sustainable over the life of the form;
c. A statement that the policy design and
coverage provided have been reviewed and taken into consideration;
d. A statement that the underwriting and
claims adjudication processes have been reviewed and taken into
consideration;
e. A statement that
the premiums contain at least the minimum margin for moderately adverse
experience defined in subdivision 2 e (1) of this subsection or the
specification of and justification for a lower margin required by subdivision 2
e (2) of this subsection.
(1) A composite
margin shall not be less than 10% of lifetime claims.
(2) A composite margin that is less than 10%
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 shall be submitted.
(3) A
composite margin 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 utilized, shall be justified by appropriate actuarial demonstration
addressing margins and volatility when considering the entirety of the
product.
(4) 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.
f.
(1) 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
(2) A
comparison of the premium rate schedules for similar policy forms that are
currently available from the insurer with an explanation of the differences. It
is not expected that the insurer will need to provide a comparison of every age
and set of benefits, period of payment or elimination period. A broad range of
expected combinations is to be provided in a manner designed to provide a fair
presentation for review by the commission.
g. 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 actuarial memorandum prepared, dated,
and signed by a qualified actuary shall be included and shall address and
support each specific item required as part of the actuarial certification and
provide at least the following information:
a. A description of the basis on which the
long-term care insurance premium 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
percentage 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 that includes a
description of the 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;
h. An
explanation of the review performed by the actuary prior to making the
statements in subdivisions B 2 c and d of this section;
i. A complete description of pricing
assumptions;
j. Sources and levels
of margins incorporated into the gross premiums that are the basis for the
statement in subdivision B 2 a of this section of the actuarial certification
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;
k. A demonstration that the gross premiums
include the minimum composite margin specified in subdivision B 2 e of this
section; and
l. The anticipated
loss ratio and a description of how it was calculated.
Statutory Authority: §§ 12.1-13, 38.2-223, and 38.2-5202 of the Code of Virginia.
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