2006 Minnesota Statutes

62S.26 LOSS RATIO.
    Subdivision 1. Minimum loss ratio. The minimum loss ratio must be at least 60 percent,
calculated in a manner which provides for adequate reserving of the long-term care insurance
risk. In evaluating the expected loss ratio, the commissioner shall give consideration to all
relevant factors, including:
(1) statistical credibility of incurred claims experience and earned premiums;
(2) the period for which rates are computed to provide coverage;
(3) experienced and projected trends;
(4) concentration of experience within early policy duration;
(5) expected claim fluctuation;
(6) experience refunds, adjustments, or dividends;
(7) renewability features;
(8) all appropriate expense factors;
(9) interest;
(10) experimental nature of the coverage;
(11) policy reserves;
(12) mix of business by risk classification; and
(13) product features such as long elimination periods, high deductibles, and high maximum
limits.
    Subd. 2. Life insurance policies. Subdivision 1 shall not apply to life insurance policies that
accelerate benefits for long-term care. A life insurance policy that funds long-term care benefits
entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to
premiums paid, if the policy complies with all of the following provisions:
(1) the interest credited internally to determine cash value accumulations, including
long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for
cash value accumulations without long-term care set forth in the policy;
(2) the portion of the policy that provides life insurance benefits meets the nonforfeiture
requirements of section 61A.24;
(3) the policy meets the disclosure requirements of sections 62S.09, 62S.10, and 62S.11; and
(4) an actuarial memorandum is filed with the commissioner that includes:
(i) a description of the basis on which the long-term care rates were determined;
(ii) a description of the basis for the reserves;
(iii) a summary of the type of policy, benefits, renewability, general marketing method, and
limits on ages of issuance;
(iv) a description and a table of each actuarial assumption used. For expenses, an insurer
must include percentage of premium dollars per policy and dollars per unit of benefits, if any;
(v) a description and a table of the anticipated policy reserves and additional reserves to
be held in each future year for active lives;
(vi) the estimated average annual premium per policy and the average issue age;
(vii) a statement as to whether underwriting is performed at the time of application. The
statement shall indicate whether underwriting is used and, if used, the statement shall include a
description of the type or types of underwriting used, such as medical underwriting or functional
assessment underwriting. Concerning a group policy, the statement shall indicate whether the
enrollee or any dependent will be underwritten and when underwriting occurs; and
(viii) a description of the effect of the long-term care policy provision on the required
premiums, nonforfeiture values, and reserves on the underlying life insurance policy, both for
active lives and those in long-term care claim status.
    Subd. 3. Nonapplication. This section does not apply to policies or certificates that are
subject to sections 62S.021, 62S.081, and 62S.265, and that comply with those sections.
History: 1997 c 71 art 1 s 26; 1Sp2001 c 9 art 8 s 10; 2002 c 379 art 1 s 113; 2006 c 255 s
52; 2006 c 282 art 17 s 18