DAR File No. 28098

Insurance, Administration

R590-148-21

Loss Ratio

NOTICE OF PROPOSED RULE

DAR File No.: 28098
Filed: 07/21/2005, 07:24
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The change to this rule is being made to replace a change made to Section R590-148-22 that was filed 04/29/2005, and to clarify that long-term care rate filings must not only comply with this rule, R590-148, but they must also comply with the requirements of Rule R590-85, Individual Disability Insurance Forms and Individual and Group Medicare Rates. (DAR NOTE: The filing for Section R590-148-22 was published in the May 15, 2005, issue of the Bulletin under DAR No. 27844. However, the agency realized this was the wrong section to make those changes in so they are going to allow that filing to lapse and proceed with this filing.)

Summary of the rule or change:

The new wording being added to Section R590-148-21 clarifies that a health insurer's long-term care rate filing must also comply with Rule R590-85. (DAR NOTE: The proposed amendment to Rule R590-85 is under DAR No. 28117 in this issue.)

State statutory or constitutional authorization for this rule:

Sections 31A-2-201 and 31A-22-1404

Anticipated cost or savings to:

the state budget:

The changes to this section will not require anything new of department licensees, therefore, there will be no change in filings required or fees paid to the department or state's budget.

local governments:

This section only applies to the relationship between the Insurance Department and their licensees. It does not affect local government laws or procedures.

other persons:

The changes to this section will create no change in what is already required of insurers of long-term care insurance. It simply clarifies that they must also comply with Rule R590-85. As a result, this change will have no fiscal impact on insurers or their insureds.

Compliance costs for affected persons:

The changes to this section will create no change in what is already required of insurers of long-term care insurance. It simply clarifies that they must also comply with Rule R590-85. As a result, this change will have no fiscal impact on insurers or their insureds.

Comments by the department head on the fiscal impact the rule may have on businesses:

The changes to this section will create no fiscal impact on Utah businesses. D. Kent Michie, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Direct questions regarding this rule to:

Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at jwhitby@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

09/14/2005

This rule may become effective on:

09/15/2005

Authorized by:

Jilene Whitby, Information Specialist

RULE TEXT

R590. Insurance, Administration.

R590-148. Long-Term Care Insurance Rule.

R590-148-21. Loss Ratio.

(1) This section shall apply to all individual long-term care insurance except those covered in Sections R590-148-22 and R590-148-24.

(2) Benefits under individual long-term care insurance policies shall be deemed reasonable in relation to premiums provided the expected loss ratio is at least 60%, calculated in a manner which provides for adequate reserving of the long-term care insurance risk.

(3) 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;

(i) interest;

(j) experimental nature of the coverage;

(k) policy reserves;

(l) mix of business by risk classification; and

(m) product features such as long elimination periods, high deductibles and high maximum limits.

(4) The premiums charged to an insured for long-term care insurance may not increase due to either:

(a) the increasing age of the insured at ages beyond 65; or

(b) the duration the insured has been covered under the policy.

(5) Rate filings documents must contain all information required in R590-85-4.

KEY: insurance

[April 28, ]2005

Notice of Continuation August 14, 2002

31A-2-201

31A-22-1404

ADDITIONAL INFORMATION

PLEASE NOTE:

• Text to be deleted is struck through and surrounded by brackets (e.g., [example]). Text to be added is underlined (e.g., example). Some browsers may not depict some or any of these attributes on the screen or when the document is printed.
• Please see the DISCLAIMER regarding information available from state web pages.

For questions regarding the content or application of this rule, please contact Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at jwhitby@utah.gov

For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.