Required Disclosure of Rating Practices to Consumers

Section 2012 Section 2012.62  Required Disclosure of Rating Practices to Consumers a)         This Section shall apply as follows: 1)         Except as provided in subsection (a)(2), this Section applies to any long-term care policy issued in this State on or after January 1, 2003. 2)         For certificates issued on or after July 1, 2002, under a group long-term care insurance policy as defined in Section 351A-1(e)(1) of the Code that was in force prior to July 1, 2002, the provisions of this Section shall apply on the policy anniversary following July 1, 2003. b)         Other than policies for which no applicable premium rate or rate schedule increases can be made, insurers shall provide all of the information listed in this subsection (b) to the applicant at the time of application or enrollment, unless the method of application does not allow for delivery at that time.  In such a case, an insurer shall provide all of the information listed in this Section to the applicant no later than at the time of delivery of the policy or certificate. 1)         A statement that the policy may be subject to rate increases in the future; 2)         An explanation of potential future premium rate revisions, and the policyholder's or certificateholder's option in the event of a premium rate revision; 3)         The premium rate or rate schedules applicable to the applicant that will be in effect until a request is made for an increase; 4)         A general explanation for applying premium rate or rate schedule adjustments that shall include: A)        A description of when premium rate or rate schedule adjustments will be effective (e.g., next anniversary date, next billing date, etc.); and B)        The right to a revised premium rate or rate schedule as provided in subsection (b)(3) of this Section if the premium rate or rate schedule is changed; 5)         Required Rate Information A)        Information regarding each premium rate increase on this policy form or similar policy forms over the past 10 years for this State or any other state that, at a minimum, identifies: i)          The policy forms for which premium rates have been increased; ii)         The calendar years when the form was available for purchase; and iii)        The amount or percent of each increase. The percentage may be expressed as a percentage of the premium rate prior to the increase, and may also be expressed as minimum and maximum percentages if the rate increase is variable by rating characteristics. B)        The insurer may, in a fair manner, provide additional explanatory information related to the rate increases. C)        An insurer shall have the right to exclude from the disclosure premium rate increases that only apply to blocks of business acquired from other nonaffiliated insurers or the long-term care policies acquired from other nonaffiliated insurers when those increases occurred prior to the acquisition. D)        If an acquiring insurer files for a rate increase on a long-term care policy form acquired from nonaffiliated insurers or a block of policy forms acquired from nonaffiliated insurers on or before July 1, 2002, or the end of a 24 month period following the acquisition of the block or policies, the acquiring insurer may exclude that rate increase from the disclosure.  However, the nonaffiliated selling company shall include the disclosure of that rate increase in accordance with subsection (b)(5)(A) of this Section. E)        If the acquiring insurer in subsection (b)(5)(D) of this Section files for a subsequent rate increase, even within the 24 month period, on the same policy form acquired from nonaffiliated insurers or block of policy forms acquired from nonaffiliated insurers referenced in subsection (b)(5)(D) of this Section, the acquiring insurer shall make all disclosures required by subsection (b)(5)(A) of this Section, including disclosure of the earlier rate increase referenced in subsection (b)(5)(D) of this Section. c)         An applicant shall sign an acknowledgment at the time of application, unless the method of application does not allow for signature at that time, that the insurer made the disclosure required under subsections (b)(1) and (5) of this Section. If due to the method of application the applicant cannot sign an acknowledgment at the time of application, the applicant shall sign no later than at the time of delivery of the policy or certificate. d)         An insurer shall use Exhibits F and J to comply with the requirements of subsections (b) and (c) of this Section. e)         An insurer shall provide notice of an upcoming premium rate schedule increase to all policyholders or certificateholders, if applicable, at least 45 days prior to the implementation of the premium rate schedule increase by the insurer.  The notice shall include the information required by subsection (b) of this Section when the rate increase is implemented.