Ins 3.17(6)(a)(a) General claim reserve requirements are:
Ins 3.17(6)(a)1.1. Claim reserves are required for all incurred but unpaid claims on all accident and sickness insurance policies;
Ins 3.17(6)(a)2.2. Appropriate claim expense reserves are required with respect to the estimated expense of settlement of all incurred but unpaid claims; and
Ins 3.17(6)(a)3.3. The insurer shall test reserves for prior valuation years for adequacy and reasonableness along the lines of claim run-off schedules in accordance with the statutory financial statement including consideration of any residual unpaid liability.
Ins 3.17(6)(b)(b) Except as provided in par. (bm), minimum standards for claim reserves are as follows:
Ins 3.17(6)(b)1.1. For disability income:
Ins 3.17(6)(b)1.a.a. The maximum interest rate for claim reserves is specified in Appendix A;
Ins 3.17(6)(b)1.b.b. Minimum standards with respect to morbidity are those specified in Appendix A; except that, at the option of the insurer, for claims with a duration from date of disablement of less than two years, the insurer may base the reserves on the insurer’s experience, if the experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities;
Ins 3.17(6)(b)1.c.c. For contracts with an elimination period, the insurer shall measure the duration of disablement as dating from the time that benefits would have begun to accrue had there been no elimination period.
Ins 3.17(6)(b)2.2. For all other benefits:
Ins 3.17(6)(b)2.a.a. The maximum interest rate for claim reserves is specified in Appendix A;
Ins 3.17(6)(b)2.b.b. The insurer shall base the reserve on the insurer’s experience, if this experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities;
Ins 3.17(6)(bm)(bm)
Ins 3.17(6)(bm)1.1. The minimum claim reserve standards for contracts issued prior to January 1, 2017, at the option of the insurer, shall be either the reserving requirements as set forth in par. (b), or the reserving requirements set forth in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, Appendix A-010.
Ins 3.17(6)(bm)2.2. The minimum claim reserve standards for contracts issued on or after January 1, 2017, shall be the standards set forth in the National Association of Insurance Commissioners Valuation Manual as defined in s. 623.06 (1) (j), Stats.
Ins 3.17(6)(c)(c) General claim reserve methods are as follows:
Ins 3.17(6)(c)1.1. The insurer may use any generally accepted or reasonable actuarial method or combination of methods to estimate all claim liabilities.
Ins 3.17(6)(c)2.2. The methods used for estimating liabilities generally may be aggregate methods, or various reserve items may be separately valued. The insurer may also employ approximations based on groupings and averages. The insurer shall, however, determine adequacy of the claim reserves in the aggregate.
Ins 3.17(7)(7)Premium reserves.
Ins 3.17(7)(a)(a) General premium reserve requirements are:
Ins 3.17(7)(a)1.1. Unearned premium reserves are required for all contracts with respect to the period of coverage for which premiums, other than premiums paid in advance, have been paid beyond the date of valuation;
Ins 3.17(7)(a)2.2. If premiums due and unpaid are carried as an asset, the insurer shall treat the premiums as premiums in force, subject to unearned premium reserve determination. The insurer shall carry as an offsetting liability the value of unpaid commissions, premium taxes, and the cost of collection associated with due and unpaid premiums; and
Ins 3.17(7)(a)3.3. Insurers may appropriately discount to the valuation date the gross premiums paid in advance for a period of coverage commencing after the next premium due date which follows the date of valuation. The insurer shall hold this discounted premium either as a separate liability or as an addition to the unearned premium reserve which would otherwise be required as a minimum.
Ins 3.17(7)(b)(b) Minimum standards for unearned premium reserves are as follows:
Ins 3.17(7)(b)1.1. The minimum unearned premium reserve with respect to any contract is the pro rata unearned modal premium that applies to the premium period beyond the valuation date, with the premium determined on the basis of:
Ins 3.17(7)(b)1.a.a. The valuation net modal premium on the contract reserve basis applying to the contract; or
Ins 3.17(7)(b)1.b.b. The gross modal premium for the contract if no contract reserve applies.
Ins 3.17(7)(b)2.2. However, the sum of the unearned premium and contract reserves for all contracts of the insurer subject to contract reserve requirements may not be less than the gross modal unearned premium reserve on all of the contracts, as of the date of valuation. To the extent not provided for elsewhere in this section, this reserve may not be less than the expected claims for the period beyond the valuation date represented by the unearned premium reserve.
Ins 3.17(7)(c)(c) General premium reserve methods are as follows: