Connecticut Administrative Code › Title 38a - Insurance Department › 78 - Connecticut Standard Valuation Law Actuarial Opinion and Memorandum › Minimum Reserve Standards for Individual and Group Health Insurance Contracts › Section 38a-78-12 - Definitions

Current through July 10, 2024
As used in Sections
				  38a-78-11 to
				  38a-78-16, inclusive, of these
				  regulations:
(a) "Annual-Claim Cost"
				means the net annual cost per unit of benefit before the addition of expenses,
				including claim settlement expenses, and a margin for profit or contingencies.
				For example, the annual claim cost for a $100 monthly disability benefit, for a
				maximum disability benefit period of one year, with an elimination period of
				one week, with respect to a male at age 35, in a certain occupation might be
				$12, while the gross premium for this benefit might be $18. The additional $6
				would cover expenses and profit or contingencies.
(b) "Claims Accrued" means that portion of
				claims incurred on or prior to the valuation date which result in liability of
				the insurer for the payment of benefits for medical services which have been
				rendered on or prior to the valuation date, and for the payment of benefits for
				days of hospitalization and days of disability which have occurred on or prior
				to the valuation date, which the insurer has not paid as of the valuation date,
				but for which it is liable, and will have to pay after the valuation date. This
				liability is sometimes referred to as a liability for "accrued" benefits. A
				claim reserve, which represents an estimate of this accrued claim liability,
				shall be established.
(c) "Claims
				Reported" means when an insurer has been informed that a claim has been
				incurred, if the date reported is on or prior to the valuation date, the claim
				is considered as a reported claim for annual statement purposes.
(d) "Claims Unaccrued" means that portion of
				claims incurred on or prior to the valuation date which result in liability of
				the insurer for the payment of benefits for medical services expected to be
				rendered after the valuation date, and for benefits expected to be payable for
				days of hospitalization and days of disability occurring after the valuation
				date. This liability is sometimes referred to as a liability for unaccrued
				benefits. A claim reserve, which represents an estimate of the unaccrued claim
				payments expected to be made (which may or may not be discounted with
				interest), shall be established.
(e) "Claims Unreported" means when an insurer
				has not been informed, on or before the valuation date, concerning a claim that
				has been incurred on or prior to the valuation date, the claim is considered as
				an unreported claim for annual statement purposes.
(f) "Date of Disablement" means the earliest
				date the insured is considered as being disabled under the definition of
				disability in the contract, based on a doctor's evaluation or other evidence.
				Normally this date will coincide with the start of any elimination
				period.
(g) "Elimination Period"
				means a specified number of days, weeks, or months starting at the beginning of
				each period of loss, during which no benefits are payable.
(h) "Guarantee Duration" of a health
				insurance contract is the maximum number of years the health insurance contract
				can remain in force on the basis guaranteed in the contract.
(i) "Gross Premium" means the amount of
				premium charged by the insurer. It includes the net premium (based on
				claim-cost) for the risk, together with any loading for expenses, profit or
				contingencies.
(j) "Group
				Insurance" includes blanket insurance and franchise insurance and any other
				forms of group insurance.
(k)
				"Group Long-Term Disability Income Insurance" includes group contracts
				providing group disability income coverage with a maximum benefit duration that
				is longer than two years. Group long-term disability income contracts are based
				on a group pricing structure. Group long-term disability income insurance does
				not include group short-term disability coverage (coverage with benefit periods
				not longer than two years in duration), or voluntary group disability income
				coverage that is priced on an individual risk structure and generally sold in
				the workplace.
(l) "Level Premium"
				means a premium calculated to remain unchanged throughout either the lifetime
				of the policy, or for some shorter projected period of years. The premium need
				not be guaranteed; in which case, although it is calculated to remain level, it
				may be changed if any of the assumptions on which it was based are revised at a
				later time. Generally, the annual claim costs are expected to increase each
				year and the insurer, instead of charging premiums that correspondingly
				increase each year, charges a premium calculated to remain level for a period
				of years or for the lifetime of the contract. In this case the benefit portion
				of the premium is more than is needed to provide for the cost of benefits
				during the earlier years of the policy and less than the actual cost in the
				later years. The building of a prospective contract reserve is a natural result
				of level premiums.
(m) "Long-Term
				Care Insurance" means any insurance policy or rider advertised, marketed,
				offered or designed to provide coverage for not less than twelve consecutive
				months for each covered person on an expense incurred, indemnity, prepaid or
				other basis; for one or more necessary or medically necessary diagnostic,
				preventive, therapeutic, rehabilitative, maintenance or personal care services,
				provided in a setting other than an acute care unit of a hospital. Such term
				also includes a policy or rider which provides for payment of benefits based
				upon cognitive impairment or the loss of functional capacity. Long-term care
				insurance may be issued by insurers, fraternal benefit societies, nonprofit
				health, hospital, and medical service corporations, prepaid health plans,
				health care centers, or any similar organization to the extent they are
				otherwise authorized to issue life or health insurance. Long-term care
				insurance shall not include any insurance policy which is offered primarily to
				provide basic Medicare supplement coverage, basic hospital expense coverage,
				basic medical-surgical expense coverage, hospital confinement indemnity
				coverage, major medical expense coverage, disability income or related
				asset-protection coverage, disability income or related asset-protection
				coverage, accident only coverage, specified disease or specified accident
				coverage, or limited benefit health coverage.
(n) "Modal Premium" means the premium paid on
				a contract based on a premium term which could be annual, semi-annual,
				quarterly, monthly, or weekly. Thus, if the annual premium is $100 and if,
				instead, monthly premiums of $9 are paid then the modal premium is
				$9.
(o) "Negative Reserve" means the
				value of the terminal reserve when it is a negative value. Normally the
				terminal reserve is a positive value. However, if the values of the benefits
				are decreasing with advancing age or duration it could be a negative value,
				called a negative reserve.
(p)
				"Preliminary Term Reserve Method" means that the valuation net premium for each
				year falling within the preliminary term period is exactly sufficient to cover
				the expected incurred claims of that year so that the terminal reserves will be
				zero at the end of the year. As of the end of the preliminary term period, a
				new constant valuation net premium (or stream of changing valuation premiums)
				becomes applicable such that the present value of all such premiums is equal to
				the present value of all claims expected to be incurred following the end of
				the preliminary term period.
(q)
				"Present Value of Amounts Not Yet Due on Claims" means the reserve for "claims
				unaccrued" (see definition), which may be discounted at interest.
(r) "Rating Block" means a grouping of
				contracts determined by the valuation actuary based on common characteristics
				filed with the Commissioner, such as a policy form or forms having similar
				benefit designs.
(s) "Reserve"
				includes all items of benefit liability, whether in the nature of incurred
				claim liability or in the nature of contract liability relating to future
				periods of coverage, and whether the liability is accrued or unaccrued. An
				insurer under its contracts promises benefits which result in:
(1) claims which have been incurred, that is,
				for which the insurer has become obligated to make payment, on or prior to the
				valuation date. On these claims, payments expected to be made after the
				valuation date for accrued and unaccrued benefits are liabilities of the
				insurer which should be provided for by establishing claim reserves;
				or
(2) claims which are expected to
				be incurred after the valuation date. Any present liability of the insurer for
				these future claims should be provided for by the establishment of contract
				reserves and unearned premium reserves.