Section 3 AAC 28.569 - Loss ratio(a) This section applies to all long-term care insurance policies or certificates except those covered under 3 AAC 28.557 and 3 AAC 28.570.(b) Benefits under long-term care insurance policies shall be considered reasonable in relation to premiums; the expected loss ratio is a, least 60 percent, calculated in a manner that provides for adequate reserving of the long-term care insurance risk. In evaluating the expected loss ratio, 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;(10) experimental nature of the coverage;(12) mix of business by risk classification; and(13) product features including long elimination periods, high deductibles, and high maximum limits.(c) Subsection (b) of this section does 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, is guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set out in the policy;(2) the portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of AS 21.45.300;(3) the policy meets the disclosure requirements of AS 21.53.060;(4) the policy illustration meets the applicable requirements of 3 AAC 28.800 - 3 AAC 28.849; and(5) an actuarial memorandum is filed with the 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 must include percent of premium dollars for each policy and dollars for each unit of benefits;(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 for each policy and the average issue age;(G) a statement as to whether underwriting is performed at the time of application, the statement must indicate whether underwriting is used and, if used, the statement must include a description of the type or types of underwriting used, like medical underwriting or functional assessment underwriting; with regard to a group policy, the statement must indicate whether the enrollee or a 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.Eff. 3/27/2022, Register 241, April 2022Authority:AS 21.06.090
AS 21.45.300
AS 21.53.060
AS 21.53.090