§431:10H-226 - Loss ratio.

     §431:10H-226  Loss ratio.  (a)  Benefits under long-term care insurance policies shall be deemed reasonable in relation to premiums; provided that the expected loss ratio is at least sixty per cent, calculated in a manner that provides for adequate reserving of the long-term care insurance risk.  In evaluating the expected loss ratio due consideration shall be given to all relevant factors, including:

     (1)  Statistical credibility of incurred claims experience and earned premiums;

     (2)  The period for which rates are computed to provide coverage;

     (3)  Experienced and projected trends;

     (4)  Concentration of experience within early policy duration;

     (5)  Expected claim fluctuation;

     (6)  Experience refunds, adjustments, or dividends;

     (7)  Renewability features;

     (8)  All appropriate expense factors;

     (9)  Interest;

    (10)  Experimental nature of the coverage;

    (11)  Policy reserves;

    (12)  Mix of business by risk classification, if applicable; and

    (13)  Product features such as long elimination periods, high deductibles, and high maximum limits.

     (b)  For purposes of this section, the commissioner shall consult with a qualified long-term care actuary.

     (c)  Subsection (a) shall 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:

     (1)  The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;

     (2)  The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements for life insurance;

     (3)  The policy meets the disclosure requirements of section 431:10H-114 as applicable;

     (4)  Any policy illustration that meets the applicable requirements for policy illustration;

     (5)  An actuarial memorandum is filed with the insurance division that includes:

         (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 shall include per cent 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.

     (d)  This section shall apply to all long-term care insurance policies or certificates except those covered under sections 431:10H-207.5 and 431:10H-226.5. [L 1999, c 93, pt of §2; am L 2007, c 233, §18]