West Virginia Code of State Rules › Agency 114 - Insurance Commission › Title 114 - LEGISLATIVE RULE INSURANCE COMMISSIONER › Series 114-44 - Minimum Reserve Standards For Individual And Group Health Insurance Contracts › Appendix B - GLOSSARY OF TECHNICAL TERMS USED

Current through Register Vol. XLI, No. 28, July 12, 2024
As used in this rule, the following terms have the following
				  meaning:
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 would cover expenses and profit or
				  contingencies;
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;
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;
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;
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;
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;
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;
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;
GROUP INSURANCE
. The term group insurance
				  includes blanket insurance and franchise insurance and any other forms of group
				  insurance;
LEVEL PREMIUM
. 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;
LONG-TERM CARE INSURANCE
. Any insurance
				  policy or rider advertised, marketed, offered or designed to provide coverage for
				  not less than twelve (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;
MODAL PREMIUM
. This refers to 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 $100 and if, instead,
				  monthly premiums of $9 are paid then the modal premium is $9;
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;
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;
PRESENT VALUE OF AMOUNTS NOT YET DUE ON
				  CLAIMS
. The reserve for "claims unaccrued" (see definition), which may
				  be discounted at interest;
RESERVE
. The term "reserve" is used to
				  include 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:
(a) Claims which 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
(b) Claims which 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;
TERMINAL RESERVE
. This is the reserve at
				  the end of a contract year, and is defined as the present value of benefits expected
				  to be incurred after that contract year minus the present value of future valuation
				  net premiums;
UNEARNED PREMIUM RESERVE
. This reserve
				  values that portion of the premium paid or due to the insurer which is applicable to
				  the period of coverage extending beyond the valuation date. Thus if an annual
				  premium of $120 was paid on November 1, $20 would be earned as of December 31 and
				  the remaining $100 would be unearned. The unearned premium reserve could be on a
				  gross basis as in this example, or on a valuation net premium basis;
VALUATION NET MODAL PREMIUM
. This is the
				  modal fraction of the valuation net annual premium that corresponds to the gross
				  modal premium in effect on any contract to which contract reserves apply. Thus if
				  the mode of payment in effect is quarterly, the valuation net modal premium is the
				  quarterly equivalent of the valuation net annual premium.