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 R20-6-1009 - Initial Filing Requirements

Current through Register Vol. 30, No. 28, July 12, 2024
A.
				This Section applies to any long-term care policy issued in this state on or
				after May 10, 2005.
B. At the time
				of making a filing under A.R.S. §
									20-1691.08,
				an insurer shall provide to the Director a copy of the disclosure documents
				required under
				R20-6-1008
				and an actuarial certification that includes the following:
1. 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;
2. The policy design and coverage provided
				have been reviewed and taken into consideration;
3. The underwriting and claims adjudication
				processes have been reviewed and taken into consideration;
4. The premiums contain at least the minimum
				margin for moderately adverse experience as defined in subsection (4)(a) or the
				specification of and justification for a lower margin as required by subsection
				(4)(b).
a. A composite margin shall not be
				less than 10% of lifetime claims.
b. 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.
c. 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. Such lower composite
				margin, if utilized, shall be justified by appropriate actuarial demonstration
				addressing margins and volatility when considering the entirety of the
				product.
d. A greater margin may be
				appropriate in circumstances where the company has less credible experience to
				support its assumptions used to determine the premium rates.
5. A statement that the premium
				rate schedule:
a. 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
b. A comparison of the premium
				schedules for similar policy forms that are currently available from the
				insurer with an explanation of the differences; and
6. A statement that reserve requirements have
				been reviewed and considered. Support for this statement shall include:
a. Sufficient detail or sample calculations
				provided so as to have a complete depiction of the reserve amounts to be held;
				and
b. 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.