New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter IV - Financial Condition Of Insurer and Reports to Superintendent › Subchapter B - Life Insurers › Part 94 - Valuation Of Individual And Group Accident And Health Insurance Reserves › Section 94.3 - Definitions

Current through Register Vol. 46, No. 28, July 10, 2024
As used in this Part:
(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, must be
				  established.
(c) Claims reported
				  means that, 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), must be established.
(e)
				  Claims unreported means that, 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) Gross premium means the amount of premium
				  charged by the insurer, including the net premium (based on claim-cost) for the
				  risk, together with any loading for expenses, profit or
				  contingencies.
(i) Group insurance
				  means blanket insurance, franchise insurance and any other form of group
				  insurance. For purposes of reserves, franchise insurance is treated as
				  individual insurance.
(j) Group
				  long-term disability income contract means a contract that is based on a group
				  pricing structure and provides group disability income coverage with a maximum
				  benefit duration of longer than two years and does not include such a contract
				  with a maximum benefit duration of two years or less or such a contract that is
				  priced on an individual risk structure.
(k) 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
				  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.
(l) Long-term care insurance means any
				  insurance policy or rider advertised, marketed, offered or designed to provide
				  coverage for not less than 12 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. The term includes group and individual annuities
				  and life insurance policies or riders that provide directly or supplement
				  long-term care insurance. Long-term care insurance also includes a policy or
				  rider that provides for payment of benefits based upon cognitive impairment or
				  the loss of functional capacity. The term shall also include qualified
				  long-term insurance contracts. Long-term care insurance shall not include any
				  insurance policy that 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, accident-only
				  coverage, specified disease or specified accident coverage, or limited benefit
				  health coverage. With regard to life insurance, long- term care insurance does
				  not include life insurance policies that accelerate the death benefit
				  specifically for one or more of the qualifying events of terminal illness,
				  medical conditions requiring extraordinary intervention or permanent
				  institutional confinement, and that provide a lien against the policy or the
				  option of a lump-sum payment for those benefits, and where neither the benefits
				  nor the eligibility for the benefits is conditioned upon the receipt of
				  long-term care. Long-term care also includes those policies, riders, or
				  certificates covered by sections
				  52.12
				  and
				  52.13 
				  of this Title (Regulation 62).
(m)
				  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 $120 and if, instead, monthly premiums of $10 are paid, then
				  the modal premium is $10.
(n)
				  Negative reserve. 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.
(o) Preliminary term reserve method means a
				  method of valuation under which 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.
(p)
				  Present value of amounts not yet due on claims means the reserve for claims
				  unaccrued (as defined in subdivision [d] of this section), which may be
				  discounted at interest.
(q) Rating
				  block means a grouping of contracts determined by the valuation actuary based
				  on common characteristics filed with the superintendent, such as a policy form
				  or forms having similar benefit designs.
(r) 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 that
				  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 that 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.