Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 3 - LIFE, ACCIDENT, AND HEALTH INSURANCE AND ANNUITIES › Subchapter GG - MINIMUM RESERVE STANDARDS FOR INDIVIDUAL AND GROUP ACCIDENT AND HEALTH INSURANCE › Section 3.7007 - Glossary of Technical Terms Used

Current through Reg. 49, No. 28; July 12, 2024
The following words and terms, when used in this
					 subchapter, shall have the following meanings, unless the context clearly
					 indicates otherwise.
(1) Annual-claim
				  cost--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
				  $6.00 would cover expenses and profit or contingencies.
(2) Claims accrued--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.
(3) Claims
				  reported--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.
(4) Claims unaccrued--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.
(5)
				  Claims unreported--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.
(6) Date of
				  disablement--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.
(7)
				  Elimination period--A specified number of days, weeks, or months starting at
				  the beginning of each period of loss, during which no benefits are
				  payable.
(8) Gross premium--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.
(9) Group
				  insurance--The term "group insurance" includes blanket insurance and franchise
				  insurance and any other forms of group insurance.
(10) Long-term care insurance--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. 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 maintenance organizations; 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, accident only
				  coverage, specified disease or specified accident coverage, or limited benefit
				  health coverage.
(11) Modal
				  premium--This refers to the premium paid on a contract based on a premium term
				  which could be annual, semiannual, quarterly, monthly, or weekly. Thus if the
				  annual premium is $100 and if, instead, monthly premiums of $9.00 are paid then
				  the modal premium is $9.00.
(12)
				  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.
(13) Preliminary term reserve method--Under
				  this method of valuation 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.
(14)
				  Present value of amounts not yet due on claims--The reserve for "claims
				  unaccrued" (see definition), which may be discounted at interest.
(15) Qualified actuary--An individual who:
(A) is a member in good standing of the
				  American Academy of Actuaries;
(B)
				  is familiar with the valuation requirements applicable to health insurance
				  companies; and
(C) is qualified to
				  calculate reserves for health insurance contracts in accordance with the
				  American Academy of Actuaries qualification standards.