Illinois Administrative Code › Title 50 - INSURANCE › Part 2012 - LONG-TERM CARE INSURANCE › Section 2012.64 - Initial Filing Requirements

Current through Register Vol. 48, No. 28, July 12, 2024
a) This
			 Section applies to any long-term care policy issued in this State on or after
			 January 1, 2003, except that subsections (b)(2)(D) and (b)(3) apply to any
			 long-term care policy issued in this State on or after July 1, 2018.
b) An insurer shall provide the information
			 listed in this subsection (b) to the Director 30 days prior to making a
			 long-term care insurance form available for sale.
1) A copy of the disclosure documents
			 required in Section
			 2012.62;
			 and
2) An actuarial certification
			 consisting of at least the following:
A) A
			 statement that the initial premium rate schedule is sufficient to cover
			 anticipated costs under moderately adverse experience and that the premium rate
			 schedule is reasonably expected to be sustainable over the life of the form
			 with no future premium increases anticipated;
B) A statement that the policy design and
			 coverage provided have been reviewed and taken into consideration;
C) A statement that the underwriting and
			 claims adjudication processes have been reviewed and taken into
			 consideration;
D) A statement that
			 the premiums contain at least the minimum margin for moderately adverse
			 experience defined in subsection (b)(2)(D)(i) or the specification of and
			 justification for a lower margin as required by subsection (b)(2)(D)(ii).
i) A composite margin shall not be less than
			 10% of lifetime claims.
ii) A
			 composite margin that is less than 10% may be justified in uncommon
			 circumstances. The proposed amount, full justification of the proposed amount
			 and methods to monitor developing experience that would be the basis for
			 withdrawal of approval for such lower margins must be submitted.
iii) A composite margin lower than otherwise
			 considered appropriate for the stand-alone long-term care policy may be
			 justified for long-term care benefits provided through a life policy or an
			 annuity contract. The lower composite margin, if utilized, shall be justified
			 by appropriate actuarial demonstration addressing margins and volatility when
			 considering the entirety of the product.
iv) A greater margin may be appropriate in
			 circumstances in which the company has less credible experience to support its
			 assumptions used to determine the premium rates.
E) Either:
i) A statement that the premium rate schedule
			 is not less than the premium rate schedule for existing similar policy forms
			 also available from the insurer, except for reasonable differences attributable
			 to benefits; or
ii) A comparison of
			 the premium schedules for similar policy forms that are currently available
			 from the insurer with an explanation of the differences.
F) A statement that reserve requirements have
			 been reviewed and considered. Support for this statement shall include:
i) Sufficient detail or sample calculations
			 that provide a complete depiction of the reserve amounts to be held;
			 and
ii) A statement that the
			 difference between the gross premium and the net valuation premium for renewal
			 years is sufficient to cover expected renewal expenses or, if such a statement
			 cannot be made, a complete description of the situations where this does not
			 occur. An aggregate distribution of anticipated issues may be used as long as
			 the underlying gross premiums maintain a reasonably consistent
			 relationship.
3) An actuarial memorandum prepared, dated
			 and signed by the member of the Academy of Actuaries shall be included and
			 shall address and support each specific item required as part of the actuarial
			 certification and shall provide at least the following information:
A) An explanation of the review performed by
			 the actuary prior to making the statements in subsections (b)(2)(B) and
			 (C);
B) A complete description of
			 pricing assumptions;
C) Sources and
			 levels of margins incorporated into the gross premiums that are the basis for
			 the statement in subsection (b)(2)(A) of the actuarial certification and an
			 explanation of the analysis and testing performed in determining the
			 sufficiency of the margins. Deviations in margins between ages, sexes, plans or
			 states shall be clearly described. Deviations in margins required to be
			 described are other than those produced utilizing generally accepted actuarial
			 methods for smoothing and interpolating gross premium scales; and
D) A demonstration that the gross premiums
			 include the minimum composite margin specified in subsection
			 (b)(2)(D).