1. A. If long-term care benefits are provided through the acceleration of benefits under group or individual life policies or riders, an insurer shall determine policy reserves for long-time care benefits under A.R.S. § 20-510. An insurer shall also establish claim reserves for a policy or rider in claim status.
2. B. An insurer shall base reserves for policies and riders under subsection (A) on the multiple decrement model using all relevant decrements except for voluntary termination rates. An insurer may use single decrement approximations if the calculation produces essentially similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. The insurer, when calculating reserves, may take into account the reduction in life insurance benefits due to the payment of long-term care benefits. The insurer shall not set the reserves for the long-term care benefit and the life insurance benefit to be less than the reserves for the life insurance benefit assuming no long-term care benefit.

3. C. In the development and calculation of reserves for policies and riders subject to this Section, an insurer shall give due regard to the applicable policy provisions, marketing methods, administrative procedures and all other considerations which impact projected claim costs including the following:

   1. 1. Definition of insured events

      ,

   2. 2. Covered long-term care facilities

      ,

   3. 3. Existence of home convalescence care coverage

      ,

   4. 4. Definition of facilities

      ,

   5. 5. Existence or absence of barriers to eligibility

      ,

   6. 6. Premium waiver provision

      ,

   7. 7. Renewability

      ,

   8. 8. Ability to raise premiums

      ,

   9. 9. Marketing method

      ,

   10. 10. Underwriting procedures

       ,

   11. 11. Claims adjustment procedures

       ,

   12. 12. Waiting period

       ,

   13. 13. Maximum benefit

       ,

   14. 14. Availability of eligible facilities

       ,

   15. 15. Margins in claim costs

       ,

   16. 16. Optional nature of benefit

       ,

   17. 17. Delay in eligibility for benefit

       ,

   18. 18. Inflation protection provisions

       ,

   19. 19. Guaranteed insurability option

       , and

   20. 20. Other similar or comparable factors affecting risk.
4. D. A member of the American Academy of Actuaries shall certify an insurer’s use of any applicable valuation morbidity table as appropriate as a statutory valuation table.
5. E. When long-term care benefits are provided other than as described in subsection (A), an insurer shall determine reserves under A.R.S. § 20-508.

Historical Note

Adopted effective August 10, 1992 (Supp. 92-3). R20-6-1012 recodified from R4-14-1012 (Supp. 95-1). R20-6-1012 renumbered to R20-6-1016; new Section R20-6-1012 renumbered from R20-6-1009 and amended by final rulemaking at 10 A.A.R. 4661, effective January 3, 2005 (Supp. 04-4). Section repealed; new Section renumbered from R20-6-1013 and amended by final exempt rulemaking at 23 A.A.R. 1119, effective November 10, 2017 (Supp. 17-2).