Washington Administrative Code › Title 284 - Insurance Commissioner, Office of the › Chapter 284-54 - Long-term care insurance rules › Section 284-54-630 - Loss ratio requirements - Individual contract forms

Current through Register Vol. 24-14, July 15, 2024
The following standards and requirements apply to individual
				contract forms:
(1) Benefits shall be
			 deemed reasonable in relation to the premiums if the overall loss ratio is at
			 least sixty percent over a calculating period chosen by the health care service
			 contractor or health maintenance organization which calculating period is
			 satisfactory to the commissioner.
(2) The calculating period may vary with the
			 benefit and renewal provisions. The health care service contractor or health
			 maintenance organization may be required to demonstrate the reasonableness of
			 the calculating period chosen by the actuary responsible for the premium
			 calculations. A brief explanation of the selected calculating period shall
			 accompany the filing.
(3) Contract
			 forms, the benefits of which are particularly exposed to the effects of
			 inflation and whose premium income may be particularly vulnerable to an eroding
			 persistency and other similar forces, shall use a relatively short calculating
			 period reflecting the uncertainties of estimating the risks involved. Contract
			 forms based on more dependable statistics may employ a longer calculating
			 period. The calculating period may be the lifetime of the contract for
			 guaranteed renewable and noncancellable contract forms if such forms provide
			 benefits which are supported by reliable statistics and which are protected
			 from inflationary or eroding forces by such factors as fixed dollar coverage,
			 inside benefit limits, or the inherent nature of the benefits. The calculating
			 period may be as short as one year for coverage which are based on statistics
			 of minimal reliability or which are highly exposed to inflation.
(4) A request for a rate increase to be
			 effective at the end of the calculating period shall include a comparison of
			 the actual to the expected loss ratios, shall employ any accumulation of
			 reserves in the determination of rates for the new calculating period, and
			 shall account for the maintenance of such reserves for future needs. The
			 request for the rate increase shall be further documented by the expected loss
			 ratio for the new calculating period.
(5) A request for a rate increase submitted
			 during the calculation period shall include a comparison of the actual to the
			 expected loss ratios, a demonstration of any contributions to and support from
			 the reserves, and shall account for the maintenance of such reserves for future
			 needs. If the experience justifies a premium increase it shall be deemed that
			 the calculating period has prematurely been brought to an end. The rate
			 increase shall further be documented by the expected loss ratio for the next
			 calculating period.
(6) The
			 commissioner may accept a series of two or three smaller rate increases in lieu
			 of one large increase. These should be calculated to reduce lapses and
			 antiselection that often result from large rate increases. A demonstration of
			 such calculations, whether for a single rate increase or for a series of
			 smaller rate increases, satisfactory to the commissioner, shall be attached to
			 the filing.
(7) Health care service
			 contractors and health maintenance organizations shall review their experience
			 periodically and file appropriate rate revisions in a timely manner to reduce
			 the necessity of later filing of exceptionally large rate increases.
Statutory Authority:
				  RCW
				  48.02.060(3),
				  48.30.010 and
				  48.84.910. 87-15-027 (Order R
				  87-7), §
										284-54-630, filed
				  7/9/87.