Loss Ratio

Section 023 applies to all (group and individual) long-term care insurance policies or certificates except those covered under Sections 024 and 025 of this chapter. (3-31-22) 01. Expected Loss Ratios. Benefits under long-term care insurance policies are reasonable in relation to premiums provided the expected loss ratio is at least sixty percent (60%), calculated in a manner which provides for adequate reserving of the long-term care insurance risk. In evaluating the expected loss ratio, due consideration is given to all relevant factors, including: (3-31-22) a. Statistical credibility of incurred claims experience and earned premiums; (3-31-22) b. The period for which rates are computed to provide coverage; (3-31-22) c. Experienced and projected trends; (3-31-22) d. Concentration of experience within early policy duration; (3-31-22) e. Expected claim fluctuation; (3-31-22) IDAHO ADMINISTRATIVE CODE IDAPA 18.04.11 – Long-Term Care Department of Insurance Insurance Minimum Standards Section 023 Page 18 f. Experience refunds, adjustments or dividends; (3-31-22) g. Renewability features; (3-31-22) h. All appropriate expense factors; (3-31-22) i. Interest; (3-31-22) j. Experimental nature of the coverage; (3-31-22) k. Policy reserves; (3-31-22) l. Mix of business by risk classification; and (3-31-22) m. Product features such as long elimination periods, high deductibles and high maximum limits. (3-31-22) 02. Policies That Accelerate Benefits. Subsection 023.01 cannot 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: (3-31-22) a. 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; (3-31-22) b. The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of Section 41-1927, Idaho Code, Standard Nonforfeiture Law – Life Insurance. (3-31-22) c. The policy meets the disclosure requirements of Sections 41-4605(9), 41-4605(10), and 41- 4605(11), Idaho Code. (3-31-22) i. Any policy illustration meets the applicable requirements of the NAIC Life Insurance Illustrations Model Regulation. (7-1-26) d. An actuarial memorandum is filed with the insurance department that includes: (3-31-22) i. A description of the basis on which the long-term care rates were determined; (3-31-22) ii. A description of the basis for the reserves; (3-31-22) iii. A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance; (3-31-22) iv. A description and a table of each actuarial assumption used. For expenses, an insurer will include percent of premium dollars per policy and dollars per unit of benefits, if any; (3-31-22) v. A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives; (3-31-22) vi. The estimated average annual premium per policy and the average issue age; (3-31-22) vii. A statement as to whether underwriting is performed at the time of application. The statement indicates whether underwriting is used and, if used, the statement includes a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement indicates whether the enrollee or any dependent will be underwritten and when underwriting occurs; IDAHO ADMINISTRATIVE CODE IDAPA 18.04.11 – Long-Term Care Department of Insurance Insurance Minimum Standards Section 024 Page 19 and (3-31-22) viii. A description of the effect of the long-term care policy provision on the prescribed premiums, nonforfeiture values and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status. (3-31-22)