Arizona Administrative Code › Title 20 - COMMERCE, FINANCIAL INSTITUTIONS, AND INSURANCE › Chapter 06 - DEPARTMENT OF INSURANCE AND FINANCIAL INSTITUTIONS - INSURANCE DIVISION › Article 10 - LONG-TERM CARE INSURANCE › Section R20-6-1015 - Premium Rate Schedule Increases for Policies Subject to Loss Ratio Limits Related to Original Filings

Current through Register Vol. 30, No. 28, July 12, 2024
A.
				This Section applies to any long-term care policy or certificate issued in this
				state on or after November 10, 2017.
B. An insurer shall notify the Director of a
				proposed premium rate schedule increase, including an exceptional increase, at
				least 60 days before issuing notice to its policyholders. The notice to the
				Director shall include:
1. Information
				required by R20-6-1008;
2.
				Certification by a qualified actuary that:
a.
				If the requested premium rate schedule increase is implemented and the
				underlying assumptions, which reflect moderately adverse conditions, are
				realized, no further premium rate schedule increases are anticipated;
b. The premium rate filing complies with the
				provisions of this Section; and
c.
				The insurer may request a premium rate schedule increase less than what is
				required under this Section and the Director may approve the premium rate
				schedule increase, without submission of the certification required by
				subsection (B)(2)(a), if the actuarial memorandum discloses the premium rate
				schedule increase necessary to make the certification required by subsection
				(B)(2)(a), the premium rate schedule increase filing satisfies all other
				requirements of this Section, and is, in the opinion of the Director, in the
				best interest of the policyholders.
3. An actuarial memorandum justifying the
				rate schedule change request that includes:
a. Lifetime projections of earned premiums
				and incurred claims based on the filed premium rate schedule increase; and the
				method and assumptions used in determining the projected values, including the
				following:
i. Any assumptions that deviate
				from those used for pricing other forms currently available for sale;
ii. Annual values for the five years
				preceding and the three years following the valuation date, provided
				separately;
iii. Development of the
				lifetime loss ratio, unless the rate increase is an exceptional increase;
				and
iv. A demonstration of
				compliance with subsection (C).
b. For exceptional increases, the actuarial
				memorandum shall also include:
i. The
				projected experience that is limited to the increases in claims expenses
				attributable to the approved reasons for the exceptional increase;
				and
ii. If the Director determines
				under Section
				R20-6-1002(B)(3)
				that offsets may exist, the insurer shall use appropriate net projected
				experience;
c.
				Disclosure of how reserves have been incorporated in this rate increase when
				the rate increase will trigger contingent benefit upon lapse;
d. Disclosure of the analysis performed to
				determine why a rate adjustment is necessary, which pricing assumptions were
				not realized and why, and any other actions of the insurer on which the actuary
				has relied;
e. A statement that the
				actuary has considered policy design, underwriting, and claims adjudication
				practices;
f. Composite rates
				reflecting projections of new certificates in the event it is necessary to
				maintain consistent premium rates for new certificates and certificates
				receiving a rate increase; and
g. A
				demonstration that actual and projected costs exceed costs anticipated at the
				time of the initial pricing under moderately adverse experience and that the
				composite margin specified in R20-6-1009(B)(4) is projected to be
				exhausted.
4. A
				statement that renewal premium rate schedules are not greater than new business
				premium rate schedules except for differences attributable to benefits, unless
				the insurer provides the Director with documentation justifying the greater
				rate; and
5. Upon the Director's
				request, other similar and related information the Director may require to
				evaluate the premium rate schedule increase.