Virginia Administrative Code › Title 14 - INSURANCE › Agency 5 - STATE CORPORATION COMMISSION, BUREAU OF INSURANCE › Chapter 200 - RULES GOVERNING LONG-TERM CARE INSURENCE › Section 14VAC5-200-77 - Initial filing requirements

Current through Register Vol. 40, No. 24, July 15, 2024
A. This section shall apply to any long-term
				care policy form filed with the commission on or after September 1, 2015
				.
B. An insurer shall provide the
				information listed in this section to the commission and receive approval of
				the form prior to making a long-term care insurance form available for sale.
1. A copy of the disclosure documents
				required in
				14VAC5-200-75; and
2. An actuarial certification consisting of
				at least the following:
a. A statement that
				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;
b.
				An explanation for supporting subdivision 2 a of this subsection, including (i)
				a description of the margin for moderately adverse experience that is included
				in the premium rates and (ii) a description of the testing of pricing
				assumptions that was done to support the conclusion that the filed premium
				rates are sustainable over the life of the form;
c. A statement that the policy design and
				coverage provided have been reviewed and taken into consideration;
d. A statement that the underwriting and
				claims adjudication processes have been reviewed and taken into
				consideration;
e. A statement that
				the premiums contain at least the minimum margin for moderately adverse
				experience defined in subdivision 2 e (1) of this subsection or the
				specification of and justification for a lower margin required by subdivision 2
				e (2) of this subsection.
(1) A composite
				margin shall not be less than 10% of lifetime claims.
(2) 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 shall be submitted.
(3) 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.
(4) 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.
f.
(1) A statement that the premium rate
				schedule 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
(2) A
				comparison of the premium rate schedules for similar policy forms that are
				currently available from the insurer with an explanation of the differences. It
				is not expected that the insurer will need to provide a comparison of every age
				and set of benefits, period of payment or elimination period. A broad range of
				expected combinations is to be provided in a manner designed to provide a fair
				presentation for review by the commission.
g. A statement that reserve requirements have
				been reviewed and considered. Support for this statement shall include:
(i) sufficient detail or sample calculations
				provided so as to have a complete depiction of the reserve amounts to be held;
				and
(ii) 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.
3. An actuarial memorandum prepared, dated,
				and signed by a qualified actuary shall be included and shall address and
				support each specific item required as part of the actuarial certification and
				provide at least the following information:
a. A description of the basis on which the
				long-term care insurance premium rates were determined;
b. A description of the basis for the
				reserves;
c. A summary of the type
				of policy, benefits, renewability, general marketing method, and limits on ages
				of issuance;
d. A description and a
				table of each actuarial assumption used. For expenses, an insurer must include
				percentage of premium dollars per policy and dollars per unit of benefits, if
				any;
e. A description and a table
				of the anticipated policy reserves and additional reserves to be held in each
				future year for active lives;
f.
				The estimated average annual premium per policy and the average issue
				age;
g. A statement that includes a
				description of the types of underwriting used, such as medical underwriting or
				functional assessment underwriting. Concerning a group policy, the statement
				shall indicate whether the enrollee or any dependent will be underwritten and
				when underwriting occurs;
h. An
				explanation of the review performed by the actuary prior to making the
				statements in subdivisions B 2 c and d of this section;
i. A complete description of pricing
				assumptions;
j. Sources and levels
				of margins incorporated into the gross premiums that are the basis for the
				statement in subdivision B 2 a of this section of the actuarial certification
				and an explanation of the analysis and testing performed in determining the
				sufficiency of the margins. Deviations in margins between ages, sexes, plans,
				or states shall be clearly described. Deviations in margins required to be
				described are other than those produced utilizing generally accepted actuarial
				methods for smoothing and interpolating gross premium scales;
k. A demonstration that the gross premiums
				include the minimum composite margin specified in subdivision B 2 e of this
				section; and
l. The anticipated
				loss ratio and a description of how it was calculated.