Pennsylvania Code › Title 31 - INSURANCE › Part IV - Life Insurance › Chapter 84a - MINIMUM RESERVE STANDARDS FOR INDIVIDUAL AND GROUP HEALTH AND ACCIDENT INSURANCE CONTRACTS › Section 84a.2 - Applicability and scope

Current through Register Vol. 54, No. 28, July 13, 2024
(a) This
				chapter shall take effect for annual statements for the year 1993.
(b) The minimum reserve standards of this
				chapter apply to individual and group health and accident insurance coverages,
				including single premium credit health and accident insurance, issued prior to
				January 1, 2017, by life insurance companies, property insurance companies,
				casualty insurance companies and fraternal benefit societies. Monthly premium
				credit health and accident insurance is not subject to this chapter, but
				instead is subject to the reserve standards in Chapter 73 (relating to credit
				life and credit accident and health insurance).
(c) When an insurer determines that adequacy
				of its health and accident insurance reserves requires reserves in excess of
				the minimum standards specified in this chapter, the increased reserves shall
				be held and shall be considered the minimum reserves for that
				insurer.
(d) With respect to a
				block of contracts, or with respect to an insurer's health and accident
				business as a whole, a prospective gross premium valuation is the ultimate test
				of reserve adequacy as of a given valuation date. The gross premium valuation
				will take into account, for contracts in force, in a claims status, or in a
				continuation of benefits status on the valuation date, the present value as of
				the valuation date of expected benefits unpaid, expected expenses unpaid and
				unearned or expected premiums, adjusted for future premium increases reasonably
				expected to be put into effect.
(e)
				The gross premium valuation is to be performed whenever a significant doubt
				exists as to reserve adequacy with respect to a major block of contracts, or
				with respect to the insurer's health and accident business as a whole. If
				inadequacy is found to exist, immediate loss recognition shall be made and the
				reserves restored to adequacy. Adequate reserves, inclusive of claim, premium
				and contract reserves, if any, shall be held with respect to all contracts,
				regardless of whether contract reserves are required for the contracts under
				this chapter.
(f) Whenever minimum
				reserves, as defined in this chapter, exceed reserve requirements as determined
				by a prospective gross premium valuation, the minimum reserves remain the
				minimum requirement under this chapter.
(g) Minimum standards for three categories of
				health and accident insurance reserves are established. These categories are
				claim reserves, premium reserves and contract reserves.
(h) Adequacy of an insurer's health and
				accident insurance reserves is to be determined on the basis of the three
				categories of subsection (g) combined. These minimum standards emphasize the
				importance of determining appropriate reserves for each of the three categories
				separately.
The provisions of this §
											84a.2 amended under sections 206,
					 506, 1501 and 1502 of The Administrative Code of 1929 (71 P.S.
					 §§
												66,
					 186,
					 411 and
					 412); and
					 40 Pa.C.S. §
												7124(c)(1) and
					 (2).