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)
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.
iii. Projections demonstrating compliance with par. (b).
Disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse.
Disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the insurer have been relied on by the actuary.
A statement that policy design, underwriting and claims adjudication practice have been taken into consideration.
If it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, the insurer shall file composite rates reflecting projections of new certificates.
A statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the commissioner.
Sufficient information for review of the premium rate schedule increase by the commissioner.
For exceptional increases, the projected experience should be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase. If the commissioner determines that offsets may exist, the insurer shall use appropriate net projected experience.
The commissioner may request a review by an independent actuary or a professional actuarial body of the basis for a request that an increase be considered an exceptional increase.
All premium rate schedule increases shall be determined in accordance with all of the following requirements:
The commissioner, in determining that the necessary basis for an exceptional increase exists, shall also determine any potential offsets to higher claims costs.
Exceptional increases shall provide that 70% of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits.
Premium rate schedule increases shall be calculated such that the sum of the accumulated value of incurred claims, without the inclusion of active life reserves, and the present value of future projected incurred claims, without the inclusion of active life reserves, will not be less than the sum of the following:
Eighty-five percent of the accumulated value of prior premium rate schedule increases on an earned basis.
Eighty-five percent of the present value of future projected premiums not in this subd. 3. c.
on an earned basis.
If a policy form has both exceptional and other increases, the values in subd. 3. b.
shall also include 70% for exceptional rate increase amount.
All present and accumulated values used to determine rate increases shall use the maximum valuation interest rate for contract reserves as specified in s. Ins 3.17
. The actuary shall disclose, as part of the actuarial memorandum, the use of any appropriate averages.
For each rate increase that is implemented, the insurer shall file for review by the commissioner updated projections as defined in par. (a) 3. a.
annually for the next 3 years and include a comparison of actual results to projected values. The commissioner may extend the period to greater than 3 years if actual results are not consistent with projected values from prior projections.
If any premium rate in the revised premium rate schedule is greater than 200% of the comparable rate in the initial premium schedule, lifetime projections, as defined in par. (a) 3. a.
, shall be filed for review by the commissioner every 5 years following the end of the required period in par. (c)
If the commissioner has determined that the actual experience following a rate increase does not adequately match the projected experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in par. (b)
, the commissioner may require the insurer to make premium rate schedule adjustments or take other measures to reduce the difference between the projected and actual experience. In determining whether the actual experience adequately matches the projected experience, consideration should be given to par. (a) 3. e.
, if applicable.
If the majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse, the insurer shall file all of the following:
A plan, subject to commissioner approval, for improved administration or claims processing designed to eliminate the potential for further deterioration of the policy form requiring further premium rate schedule increases, or both, or to demonstrate that appropriate administration and claims processing have been implemented or are in effect; otherwise the commissioner may impose the condition in par. (g)
The original anticipated lifetime loss ratio, and the premium rate schedule increase that would have been calculated according to par. (b)
had the greater of the original anticipated lifetime loss ratio or 58% been used in the calculations described in par. (b) 3. a.
For a rate increase filing that meets the following criteria, the commissioner shall review, for all policies included in the filing, the projected lapse rates and past lapse rates during the 12 months following each increase to determine if significant adverse lapsation has occurred or is anticipated when all of the following conditions occur:
The rate increase is not the first rate increase requested for the specific policy form or forms.
The majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse.
If significant adverse lapsation has occurred, is anticipated in the filing or is evidenced in the actual results as presented in the updated projections provided by the insurer following the requested rate increase, the commissioner may determine that a rate spiral exists. Following the determination that a rate spiral exists, the commissioner may require the insurer to offer, without underwriting, to all in force insureds subject to the rate increase the option to replace existing coverage with one or more reasonably comparable products being offered by the insurer or its affiliates.
The offer described in subd. 2.
shall be subject to the approval of the commissioner, be based on actuarially sound principles, but not be based on attained age, and shall provide that maximum benefits under any new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy.
The insurer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. If a rate increase on the policy form, the rate increase shall be limited to the maximum rate increase determined based on the combined experience or the maximum rate increase determined based only on the experience of the insureds originally issued the form plus 10%, whichever is less.
If the commissioner determines that the insurer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care, nursing home, and home health care insurance, the commissioner may, in addition to the provisions of par. (g)
, either prohibit the insurer from filing and marketing comparable coverage for a period of up to 5 years, or prohibit the insurer from offering all other similar coverages and require the insurer to limit marketing of new applications to the products subject to recent premium rate schedule increases.