Rule 120-2-16-.19 - Loss Ratio(1) This section shall apply to all long-term care insurance policies or certificates except those covered under Sections 120-2-16-.10 and 120-2-16-.20.(2) Benefits under long-term care insurance policies shall be deemed reasonable in relation to premiums provided the expected loss ratio is at least 60 percent, calculated in a manner which 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:(a) Statistical credibility of incurred claims experience and earned premiums;(b) The period for which rates are computed to provide coverage;(c) Experienced and projected trends;(d) Concentration of experience within early policy duration;(e) Expected claim fluctuation;(f) Experience refunds, adjustments or dividends;(g) Renewability features;(h) All appropriate expense factors;(j) Experimental nature of the coverage;(l) Mix of business by risk classification; and(m) Product features such as long elimination periods, high deductibles and high maximum limits.(3) Subsection (2) 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:(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;(b) The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of O.C.G.A. Section 33-25-4;(c) The policy meets the disclosure requirements of O.C.G.A. Section 33-42-6;(d) Any policy illustration that meets the applicable requirements of the NAIC Life Insurance Illustrations Model Regulation; and(e) An actuarial memorandum is filed with the insurance department that includes: (i) A description of the basis on which the long-term care rates were determined;(ii) A description of the basis for the reserves;(iii) A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;(iv) A description and a table of each actuarial assumption used. For expenses, an insurer must include percent of premium dollars per policy and dollars per unit of benefits, if any;(v) A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;(vi) The estimated average annual premium per policy and the average issue age;(vii) 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(viii) 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.Ga. Comp. R. & Regs. R. 120-2-16-.19
O.C.G.A. Secs. 33-2-9, 33-42-6, 33-42-7, 49-4-164, 49-4-165.
Original Rule entitled "Loss Ratio" adopted. F. Mar. 27, 2008; eff. Apr. 16, 2008.