836-052-0666 Loss Ratio (1) This rule applies to all long-term care insurance policies, certificates and riders except those that are subject to OAR 836-052-0566 and 836-052-0676. (2) Benefits under long-term care insurance policies and riders shall be deemed reasonable in relation to premiums only if the expected loss ratio is at least 60 percent and is calculated in a manner providing for adequate reserving of the long-term care insurance risk. (3) In evaluating the expected loss ratio under section (2) of this rule, an insurer shall consider 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) The mix of business by risk classification; (m) Product features, such as long elimination periods, high deductibles and high maximum limits. (4) The loss ratio requirements under this rule apply with respect to Oregon policyholders. Subject to the approval of the Director, an insurer may use national or regional loss ratio experience to modify the Oregon experience when the experience for Oregon policyholders is small and statistically unreliable. Oregon experience and national or regional experience must be submitted in separate tables and the modification approved by the Director. (5) The experience under all policy and rider forms insuring a class of insureds with similar benefits and underwriting requirements shall be combined when demonstrating compliance with the requirements of this section. (6) The effect on loss ratios of all requirements necessary to qualify for benefits shall be included in the calculations required under this rule. (7) Sections (1) to (6) of this rule do 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, is 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 ORS 743.204 or 743.275; (c) The policy or rider meets the disclosure requirements of ORS 743.655(9) to (11); (d) Any life policy illustration meets the applicable requirements of OAR 836-051-0500 to 836-051-0600; and (e) An actuarial memorandum filed with the Director must be submitted by a qualified actuary in good standing with the American Academy of Actuaries. The memorandum must include: (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 per policy and dollars per unit of benefits, if any; (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 per policy and the average issue age; (G) 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 (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. Statutory/Other Authority: ORS 731, 742 & 743 Statutes/Other Implemented: ORS 742.005 & 743.655(1)(a) History: ID 10-2007, f. 12-3-07, cert. ef. 1-1-08 Renumbered from 836-052-0530, ID 3-2005, f. & cert. ef. 3-1-05 ID 20-1990, f. 12-13-90, cert. ef. 1-1-91