Section 62S.26 - LOSS RATIOSubdivision 1.Minimum loss ratio.The minimum loss ratio must be 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, the commissioner shall give consideration 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 such as long elimination periods, high deductibles, and high maximum limits.Subd. 2.Life insurance policies.Subdivision 1 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:
(1) 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;(2) the portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of section 61A.24;(3) the policy meets the disclosure requirements of sections 62S.09, 62S.10, and 62S.11;(4) any policy illustration that meets the applicable requirements of the NAIC Life Insurance Illustrations Model Regulation; and(5) an actuarial memorandum is filed with the commissioner 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 percentage 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.Subd. 3.Nonapplication. This section does not apply to policies or certificates that are subject to sections 62S.021, 62S.081, and 62S.265, and that comply with those sections.
1997 c 71 art 1 s 26; 1Sp2001 c 9 art 8 s 10; 2002 c 379 art 1 s 113; 2006 c 255 s 52; 2006 c 282 art 17 s 18; 2008 c 344 s 31