West Virginia Code of State Rules
Agency 114 - Insurance Commission
Title 114 - LEGISLATIVE RULE INSURANCE COMMISSIONER
Series 114-44 - Minimum Reserve Standards For Individual And Group Health Insurance Contracts
Section 114-44-6 - Claim Reserves
Universal Citation: 114 WV Code of State Rules 114-44-6
Current through Register Vol. XLI, No. 38, September 20, 2024
6.1. General.
a. Claim reserves are required for all incurred
but unpaid claims on all health insurance policies.
b. Appropriate claim expense reserves are required
with respect to the estimated expense of settlement of all incurred but unpaid
claims.
c. All claim reserves for prior
valuation years are to be tested for adequacy and reasonableness along the lines of
claim runoff schedules in accordance with the statutory financial statement
including consideration of any residual unpaid liability.
6.2. Minimum Standards for Claim Reserves.
a. Disability Income.
A. Interest. The maximum interest rate for claim
reserves is specified in Appendix A of this rule.
B. Morbidity. Minimum standards with respect to
morbidity are those specified in Appendix A of this rule; except that, at the option
of the insurer:
(a). For claims with a duration
from date of disablement of less than two years, reserves may be based on the
insurer's experience, if the experience is considered credible, or upon other
assumptions designed to place a sound value on the liabilities; and
(b). For group disability income claims with a
duration from date of disablement of more than two (2) years but less than five (5)
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 approval of a plan of modification to the
reserve basis must include:
(A). An analysis of
the credibility of the experience;
(B).
A description of how all of the insurer's experience is proposed to be used in
setting reserves;
(C). A description and
quantification of the margins to be included;
(D). A summary of the financial impact that the
proposed plan of modification would have had on the insurer's last filed annual
statement;
(E). A copy of the approval
of the proposed plan of modification by the commissioner of the state of domicile;
and
(F). Any other information
considered necessary by the commissioner.
C. Duration of Disablement. 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. All Other
Benefits.
A. Interest. The maximum interest rate
for claim reserves is specified in Appendix A of this rule.
B. Morbidity or other Contingency. The reserve
should be based on the insurer's experience, if the experience is considered
credible, or upon other assumptions designed to place a sound value on the
liabilities.
6.3. Claim Reserve Methods Generally.
a. The insurer
may use any generally accepted or reasonable actuarial method or combination of
methods to estimate all claim liabilities. The methods used for estimating
liabilities generally may be aggregate methods, or various reserve items may be
separately valued. Approximations based on groupings and averages may also be
employed. Adequacy of the claim reserves, however, shall be determined in the
aggregate.
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