3 Colo. Code Regs. § 702-3-1-3-6
Current through Register Vol. 47, No. 24, December 25, 2024
Section 3 CCR 702-3-1-3-6 - Requirements/Limitations On Domestic Company OpinionsOpinions submitted for Colorado domestic companies must comply with the following:
A. A company's loss and loss adjustment expense reserves reported in any required financial filing to the Commissioner shall reflect the company's best estimate of its insurance obligations, derived from reasonable assumptions, calculated in accordance with appropriate actuarial standards of practice and verified by the opining actuary. A company that establishes an amount less than the actuary's best estimate as indicated in the underlying actuarial report, if applicable, shall submit the underlying actuarial report supporting the actuary's opinion to the Commissioner no later than 30 days following the due date of the opinion. Failure to file the actuarial report within 30 days of a request by the Commissioner may result in a penalty of up to $100.00 per day. The actuarial report shall be confidential and not available for public inspection. In addition, a summary is required to be filed in accordance with the appropriate NAIC Property and Casualty Annual Statement instructions. This summary shall be confidential and not available for public inspection.B. In addition to the items required by any applicable annual statement filing instructions, all company balance sheet amounts that are established through actuarial principles, including loss analysis, mortality, morbidity, discounting or estimation techniques, must be included within the actuarial opinion. These amounts include, but are not limited to: contingent reinsurance commissions, retrospective premium adjustments, premium deficiency reserves, claims-made free tail coverage, and unearned premium reserves which are determined in a manner other than pro-rata. All items required by the applicable annual statement instructions must be included as part of the opinion's scope, even if the required item has a value of zero.
C. The actuary should be familiar with the material reinsurance arrangements of the insurer when determining the reasonableness of net reserves. The company shall not reflect any credit for reinsurance ceded in any financial statement filed, unless the reinsurance arrangements comply with the provisions of § 10-3-118, C.R.S. and Colorado Insurance Regulations 3-3-3 and 3-3-5. The actuary's opinion shall not reflect any credit taken for reinsurance ceded if the actuary is aware that reinsurance arrangements violate any provision of § 10-3-118, C.R.S. or Colorado Insurance Regulations 3-3-3 and 3-3-5.D. Unless otherwise specified by statute, reserves for outstanding losses may not be discounted, with the exception of reserves established for losses with fixed and determinable future payments, such as those emanating from workers' compensation tabular indemnity reserves and long-term disability claims. The rate of interest, at each valuation date, used in the calculation of the discount shall not exceed the lesser of (i) the company's rate of return on statutory invested assets, and (ii) the 20 year duration valuation rate determined pursuant to § 10-7-309.5, C.R.S.E. Reserves shall not be reduced for anticipated salvage and subrogation unless such reduction has been evaluated, analyzed and opined upon by the actuary as being reasonable based upon the company's past experience, current and reasonably anticipated activities, and has made due provision for the collection and other expenses associated with the receipt of the salvage and subrogation amounts. The actuary may analyze the reserve data net of salvage and subrogation so long as the actuary is satisfied that such treatment of the data will cause no material distortion.F. For all health insurers and Health Maintenance Organizations (HMOs), the annual Statement of Actuarial Opinion shall include a statement that the opining actuary has considered the impact of any risk-sharing arrangements with provider groups on health claim liabilities. If the insurer or HMO has entered into any kind of risk-sharing, usually contractual, arrangements with provider groups providing medical services to enrollees, then it is expected that the opining actuary evaluate these arrangements, and the financial position of each contracting entity. In the development and calculation of health claim reserves and other related actuarial items, due regard shall be given to the types and scopes of these arrangements, and the financial position of each contracting entity, including, but not limited to, the following: 1. Ultimate responsibility for payment of all billed medical services in the event of nonpayment by, or insolvency of, the contracting entity, as required under § 10-16-705(5)(a), C.R.S.;2. Extent to which these arrangements contain provisions for uncovered expenditures;3. Amount of the health claim liabilities allocated for uncovered expenditures;4. Existence of any stop-loss provisions;5. Retroactive settlements beyond the scope of the contracts;6. Financial position of each capitated entity. In addition to the statement required in Subsection G of this section, the Actuarial Opinion should disclose the actuary's knowledge of, and make appropriate provision for, any financially insolvent or troubled provider group that may have a material effect on the health claim liabilities;7. Existence of any contractual incentive payments; and8. Existence of any risk-sharing arrangements that involve a year-end settlement process.G. For all health insurers and HMOs, the annual Statement of Actuarial Opinion should include a statement such as: "In establishing the health claim reserves and other related actuarial items, I have evaluated and considered the impact of any and all risk-sharing arrangements with provider groups, as required under Subsection (6)(F) of Colorado Insurance Regulation 3-1-3."
If no such risk-sharing arrangements exist, the annual Statement of Actuarial Opinion should include a statement such as:
"I am aware of the requirements of Subsection (6)(F) of Colorado Insurance Regulation 3-1-3, and I am not aware of any risk-sharing arrangements which would have a material impact on the amount of health claim reserves and other related actuarial items which have been established."
If any liability has not been established in accordance with this subsection, the Actuarial Opinion should disclose the nature of the deviation from this subsection, and the rationale and the effect of such deviation.
H. Any HMO whose sole business is providing health care services to recipients under the "Colorado Medical Assistance Act", Articles 4 to 6 of Title 25.5, C.R.S., "The Children's Basic Health Plan", Article 8 of Title 25.5, C.R.S., or Medicare under Title XVIII of the federal "Social Security Act", as amended, shall also include the following statement in the annual Statement of Actuarial Opinion, "The company's surplus level and outstanding claims liability meet the requirements of § 10-16-411 (1.5), C.R.S."37 CR 20, October 25,2014, effective 11/15/201437 CR 20, October 25,2014, effective 1/1/201537 CR 23, December 10, 2014, effective 1/1/201538 CR 17, September 10, 2015, effective 10/1/201539 CR 05, March 10, 2016, effective 4/1/201639 CR 14, July 25, 2016, effective 8/15/201639 CR 23, December 10, 2016, effective 1/1/201740 CR 03, February 10, 2017, effective 3/15/201740 CR 05, March 10, 2017, effective 4/1/201740 CR 13, July 10, 2017, effective 8/1/201740 CR 17, September 10, 2017, effective 11/1/201743 CR 06, March 25, 2020, effective 4/15/202044 CR 03, February 10, 2021, effective 3/15/202144 CR 23, December 10, 2021, effective 1/1/202246 CR 03, February 10, 2023, effective 3/2/2023