65%, for group policies which issue coverage as the result of solicitation of individuals through the mail or the mass media, including, but not limited to, print or broadcast advertising.
For the purpose of this subsection a loss ratio shall be calculated on the basis of the ratio of the present value of the expected benefits to the present value of the expected premium over the entire period of coverage. An insurer shall consider and evaluate the following:
Statistical credibility of incurred claims experience and earned premium over the entire period of coverage;
The entire period for which rates have been computed to provide coverage;
Product features such as elimination periods, deductibles and maximum limits.
An insurer shall submit its calculations of the loss ratio for a long-term care policy at the same time it submits a long-term care policy form and at any time that it makes a filing for rates under a long-term care policy.
The provisions of this subsection apply only to policies issued prior to January 1, 2002.
(6) Annual loss ratio report.
An insurer shall annually, not later than April 1, file a report with the office in the form prescribed by the commissioner regarding its loss ratios and loss experience under long-term care policies. The report shall be certified to by a qualified actuary.
(7) Long-term care, nursing home and home health care policies, continuation and conversion requirements. Ins 3.455(7)(a)(a)
A group policy, as defined by s. 632.897 (1) (c)
, Stats., which is a long-term care policy shall provide terminated insureds the right to continue under the group policy as required under s. 632.897
An individual long-term care policy that provides coverage for a spouse shall permit the spouse to obtain individual coverage as required under s. 632.897 (9)
, Stats., upon divorce or annulment.
For the purpose of s. 632.897
, Stats., an insurer provides reasonably similar individual coverage to a person converting from a long-term care policy only if the insurer offers an individual policy that is identical to or in excess of the benefits provided under the terminated coverage.
In addition to offering the individual conversion policy as required under par. (c)
, an insurer may also offer the person the alternative of an individual conversion policy that complies with all of the following:
Provides coverage of care in an institutional setting, if the original policy provided coverage in an institutional setting.
Provides coverage of care in a community-based setting, if the original policy provided coverage in a community-based setting.
Written application for the converted policy shall be made and the first premium due, if any, shall be paid as directed to the insurer within 30 days after notice of termination of group coverage. The converted policy shall be issued effective on the day following the termination of coverage under the group policy, and shall be guaranteed renewable annually.
Unless the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy from which conversion is made. Where the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy replaced except when the premium was a composite premium. If the premium for the policy from which conversion is made was a composite premium then at conversion the premium shall be based upon attained age at the time of conversion.
The offer of continuation of coverage or issuance of a converted policy shall comply with s. 632.897
, Stats., except when either of the following occurs:
Termination of group coverage resulted from an individual's failure to make any required payment of premium or contribution when due.
The terminating coverage is replaced not later than 31 days after termination by group coverage effective on the day following the termination of coverage providing benefits identical to or in excess of those provided by the terminating coverage and the premium for which is calculated in a manner consistent with the requirements of par. (f)
Notwithstanding any other provision of this section, a converted policy issued to an individual who at the time of conversion is covered by another long-term care insurance policy that provides benefits on the basis of incurred expenses, may contain a provision that results in a reduction of benefits payable if the benefits provided under the additional coverage, together with the full benefits provided by the converted policy, would result in payment of more than 100% of incurred expenses. The provision shall only be included in the converted policy if the converted policy also provides for a premium decrease or refund that reflects the reduction in benefits payable.
A converted policy may provide that the benefits payable under the converted policy, together with the benefits payable under the group policy from which conversion is made, may not exceed those that would have been payable had the individual's coverage under the group policy remained in force and effect.
Notwithstanding any other provision of this section, an insured individual whose eligibility for group long-term care coverage is based upon his or her relationship to another person shall be entitled to continuation of coverage under the group policy upon termination of the qualifying relationship by death or dissolution of marriage.
(8) Reserve standards for long-term care, nursing home and home health care policies and life insurance-long-term care coverage. Ins 3.455(8)(a)1.1.
Policy reserves for life insurance-long-term care coverage shall be determined in accordance with s. 623.06 (2) (g)
, Stats. Claim reserves must also be established if a life insurance-long-term care coverage is in claim status.
Reserves for coverage subject to this paragraph should be based on the multiple decrement model utilizing all relevant decrements except for voluntary termination rates. Single decrement approximations are acceptable if the calculation produces essentially similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. The calculations may take into account the reduction in life insurance benefits due to the payment of long-term care benefits. However, in no event shall the reserves for the long-term care benefit and the life insurance benefit be less than the reserves for the life insurance benefit assuming no long-term care benefits.
In the development and calculation of reserves for policies and riders subject to this subsection, due regard shall be given to the applicable policy provisions, marketing methods, administrative procedures and all other considerations which have an impact on projected claim costs, including, but not limited to, the following:
Any applicable valuation morbidity table shall be certified as appropriate as a statutory valuation table by a member of the American academy of actuaries.
Reserves for long-term care policies shall be determined in accordance with s. Ins 3.17 (8) (b)
using tables established for reserve purposes by a qualified actuary meeting the requirements of s. Ins 6.12
and acceptable to the commissioner.
The initial premium rate schedule provided an insured covered by a long-term care policy may not increase during the initial 3 years in which the policy is in force.
Except as provided in par. (d)
, any increase in the premium rate schedule provided an insured after the initial 3-year period is subject to the following:
Any premium rate increase after the initial 3-year period is guaranteed for at least 2 years after its effective date;
For those insureds age 75 or above and whose long term care policy(s) has been in force for at least 10 years, no rate increase shall exceed 10%;
If an insurer of any long-term care policy increases rates for a policy by more than 50% in any 3-year period, the insurer shall discontinue issuing all long-term care policies in this state for a period of 2 years from the effective date of such rate increase.
If an insurer issues both individual and group long-term care policies, the insurer shall discontinue issuing the type of coverage (individual and/or group) for which rates were increased more than 50% in a 3-year period.
All rate filings subject to this requirement shall include a past history of all previous rate increases and a certification of the maximum rate increase over the last thirty-five months including the current rate increase as a percent of the premium in the first month of the 35 month period.
This provision shall also apply to any replacing insurer which purchases or otherwise assumes a block of long-term care policies from a prior insurer. For purposes of this provision, any rate increases of the prior insurer shall apply to the replacing insurer.
The premium charged to an insured may not increase due to either:
Long-term care policies which provide for inflation protection shall be subject to the restrictions contained in pars. (a)
. However, the purchase of additional coverage may not be considered a premium rate increase for purposes of determining compliance with par. (b)
at the time additional coverage is purchased. The premium charged for the purchase of additional coverage shall be subject to par. (b)
for any subsequent premium rate increases.
The commissioner may institute future rulemaking proceedings to amend the provisions in par. (b)
in appropriate circumstances, including the following:
Applicable state or federal law is enacted which materially affects the insured risk.
Unforeseen changes occur in long-term care delivery, insured morbidity or insured mortality.
Judicial interpretations or rulings are rendered regarding policy benefits or benefit triggers resulting in unforeseen claim liabilities.
Except as provided in par. (f)
the provisions of this subsection apply only to long-term care insurance policies and certificates issued from August 1, 1996 to December 31, 2001.
The provisions of this subsection do not apply to any group long-term care insurance policy or certificate issued to any labor organization or to any trust or trustee of a fund established by any employer or labor organization for members or former members if the group policy was in force prior to August 1, 1996.
(9m) Premium rate schedule increases, requesting and determining exceptional rate increases. Ins 3.455(9m)(a)(a)
An insurer shall provide notice of a pending premium rate schedule increase, including an exceptional increase, to the commissioner at least 60 days prior to the notice to the policyholders and shall include all of the following:
A certification by a qualified actuary that the premium rate filing is in compliance with the provisions of this subsection and if the requested premium rate schedule increase is implemented and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increases are anticipated.
An actuarial memorandum justifying the rate schedule change request that includes all of the following:
Lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase; and the method and assumptions used in determining the projected values, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale, including all of the following:
i. Annual values for the 5 years preceding and the 3 years following the valuation date shall be provided separately.
ii. Projections including the development of the lifetime loss ratio, unless the rate increase is an exceptional increase.