[§431:10H-207.5]  Premium rate scheduleincreases.  (a)  This section shall apply as follows:

(1)  Except as provided in paragraph (2), this sectionapplies to any long-term care policy or certificate issued in this State afterDecember 31, 2007; and

(2)  For certificates issued after June 30, 2007,under a group long-term care insurance policy, as defined in paragraph (1) ofthe definition of "group long-term care insurance" in section431:10H-104, which policy was in force on July 1, 2007, this section shallapply on the policy anniversary following July 1, 2007.

(b)  An insurer shall provide notice of apending premium rate schedule increase, including an exceptional increase, tothe commissioner at least thirty days prior to the notice to the policyholdersand shall include:

(1)  Information required by section 431:10H-221;

(2)  A certification by a qualified actuary that:

(A)  If the requested premium rate scheduleincrease is implemented and the underlying assumptions, which reflectmoderately adverse conditions, are realized, no further premium rate scheduleincreases are anticipated; and

(B)  The premium rate filing is in compliancewith this section;

(3)  An actuarial memorandum justifying the rateschedule change request that includes:

(A)  Lifetime projections of earned premiumsand incurred claims based on the filed premium rate schedule increase and themethod and assumptions used in determining the projected values, includingreflection of any assumptions that deviate from those used for pricing otherforms currently available for sale; provided that:

(i)  Annual values for the five years precedingand the three years following the valuation date shall be provided separately;

(ii)  The projections shall include thedevelopment of the lifetime loss ratio, unless the rate increase is anexceptional increase;

(iii)  The projections shall demonstratecompliance with subsection (c); and

(iv)  For exceptional increases, the projectedexperience should be limited to the increases in claims expenses attributableto the approved reasons for the exceptional increase.  If the commissionerdetermines, as provided in paragraph (4) of the definition of "exceptionalincrease" in section 431:10H-104, that offsets may exist, the insurer shalluse appropriate net projected experience;

(B)  Disclosure of how reserves have beenincorporated in this rate increase whenever the rate increase will trigger acontingent benefit upon lapse;

(C)  Disclosure of the analysis performed todetermine why a rate adjustment is necessary, which pricing assumptions werenot realized and why, and what other actions taken by the company have beenrelied on by the actuary;

(D)  A statement that policy design,underwriting, and claims adjudication practices have been taken intoconsideration; and

(E)  If it is necessary to maintain consistentpremium rates for new certificates and certificates receiving a rate increase,the insurer shall file composite rates reflecting projections of newcertificates;

(4)  A statement that renewal premium rate schedulesare not greater than new business premium rate schedules except for differencesattributable to benefits, unless sufficient justification is provided to thecommissioner; and

(5)  Sufficient information for the review of the premiumrate schedule increase by the commissioner.

(c)  All premium rate schedule increases shallbe determined in accordance with the following requirements:

(1)  Exceptional increases shall provide that seventyper cent of the present value of projected additional premiums from theexceptional increase shall be returned to policyholders in benefits;

(2)  Premium rate schedule increases shall becalculated so that the sum of the accumulated value of incurred claims, withoutthe inclusion of active life reserves, and the present value of futureprojected incurred claims, without the inclusion of active life reserves, willnot be less than the sum of the following:

(A)  The accumulated value of the initialearned premium times fifty-eight per cent;

(B)  Eighty-five per cent of the accumulatedvalue of prior premium rate schedule increases on an earned basis;

(C)  The present value of future projectedinitial earned premiums times fifty-eight per cent; and

(D)  Eighty-five per cent of the present valueof future projected premiums not in subparagraph (C) on an earned basis;

(3)  If a policy form has both exceptional and otherincreases, the values in paragraph (2)(B) and (D) shall also include seventyper cent for exceptional rate increase amounts; and

(4)  All present and accumulated values used todetermine rate increases shall use the maximum valuation interest rate forcontract reserves, as applicable, as specified in sections 431:5-303 and431:5-307.  The actuary shall disclose as part of the actuarial memorandum theuse of any appropriate averages.

(d)  For each rate increase that isimplemented, the insurer shall file for review by the commissioner updatedprojections, as provided in subsection (b)(3)(A), annually for the next threeyears, and include a comparison of actual results to projected values.  Thecommissioner may extend the period to greater than three years if actualresults are not consistent with projected values from prior projections.  Forgroup insurance policies that meet the conditions in subsection (k), theprojections required by this subsection shall be provided to the policyholderin lieu of filing with the commissioner.

(e)  If any premium rate in the revised premiumrate schedule is greater than two hundred per cent of the comparable rate inthe initial premium schedule, lifetime projections, as provided in subsection(b)(3)(A), shall be filed for review by the commissioner every five yearsfollowing the end of the required period in subsection (d).  For groupinsurance policies that meet the conditions in subsection (k), the projectionsrequired by this subsection shall be provided to the policyholder in lieu offiling with the commissioner.

(f)  If the commissioner has determined thatthe actual experience following a rate increase does not adequately match theprojected experience and that the current projections under moderately adverse conditionsdemonstrate that incurred claims will not exceed proportions of premiumsspecified in subsection (c), the commissioner may require the insurer toimplement any of the following:

(1)  Premium rate schedule adjustments; or

(2)  Other measures to reduce the difference betweenthe projected and actual experience.

In determining whether the actual experienceadequately matches the projected experience, consideration should be given tosubsection (b)(3)(E), if applicable.

(g)  If the majority of the policies orcertificates to which the increase is applicable are eligible for thecontingent benefit upon lapse, the insurer shall file:

(1)  A plan, subject to the commissioner's approval,for improved administration or claims processing designed to eliminate thepotential for further deterioration of the policy form requiring furtherpremium rate schedule increases, or both, or to demonstrate that appropriateadministration and claims processing have been implemented or are in effect;otherwise the commissioner may impose the condition in subsection (h); and

(2)  The original anticipated lifetime loss ratio andthe premium rate schedule increase that would have been calculated according tosubsection (c), had the greater of the original anticipated lifetime loss ratioor fifty-eight per cent been used in the calculations described in subsection(c)(2)(A) and (C).

(h)  For a rate increase filing that meets thefollowing criteria, the commissioner shall review, for all policies included inthe filing, the projected lapse rates and past lapse rates during the twelvemonths following each increase to determine if significant adverse lapsing hasoccurred or is anticipated:

(1)  The rate increase is not the first rate increaserequested for the specific policy form or forms;

(2)  The rate increase is not an exceptional increase;and

(3)  The majority of the policies or certificates towhich the increase is applicable are eligible for the contingent benefit uponlapse.

If significant adverse lapsing has occurred, isanticipated in the filing, or is evidenced in the actual results as presentedin the updated projections provided by the insurer following the requested rateincrease, the commissioner may determine that a rate spiral exists.  Followingthe determination that a rate spiral exists, the commissioner may require theinsurer to offer, without underwriting, to all in force insureds, subject to therate increase, the option to replace existing coverage with one or morereasonably comparable products being offered by the insurer or its affiliates;provided that the offer shall be subject to the approval of the commissioner,be based on actuarially sound principles but not on attained age, and providethat maximum benefits under any new policy accepted by an insured shall bereduced by comparable benefits already paid under the existing policy.

The insurer shall maintain the experience ofall the replacement insureds separate from the experience of insuredsoriginally issued the policy forms.  In the event of a request for a rateincrease on the policy form, the rate increase shall be limited to the lesserof the maximum rate increase determined based on the combined experience or themaximum rate increase determined based only on the experience of the insuredsoriginally issued the form plus ten per cent.

(i)  If the commissioner determines that theinsurer has exhibited a persistent practice of filing inadequate initialpremium rates for long-term care insurance, the commissioner, in addition tosubsection (h), may prohibit the insurer from either of the following:

(1)  Filing and marketing comparable coverage for aperiod of up to five years; or

(2)  Offering all other similar coverages and limitingmarketing of new applications to the products subject to recent premium rateschedule increases.

(j)  Subsections (a) to (i) shall not apply topolicies for which the long-term care benefits provided by the policy areincidental, as defined in section 431:10H-104, if the policy complies with allof the following provisions:

(1)  The interest credited internally to determinecash value accumulations, including long-term care, if any, are guaranteed notto be less than the minimum guaranteed interest rate for cash valueaccumulations without long-term care set forth in the policy;

(2)  The portion of the policy that provides insurancebenefits, other than long-term care coverage, meets the nonforfeiture requirementsas applicable in any of the following:

(A)  Section 431:10D-104; and

(B)  Section 431:10D-107;

(3)  The policy meets the disclosure requirements ofsections 431:10H-113 and 431:10H-114;

(4)  The portion of the policy that provides insurancebenefits, other than long-term care coverage, meets the requirements asapplicable in the following:

(A)  Policy illustrations as required by partIV of article 10D; and

(B)  Disclosure requirements, as applicable, inarticle [10D]; and

(5)  An actuarial memorandum is filed with thecommissioner that includes:

(A)  A description of the basis on which thelong-term care rates were determined;

(B)  A description of the basis for thereserves;

(C)  A summary of the type of policy, benefits,renewability, general marketing method, and limits on ages of issuance;

(D)  A description and a table of eachactuarial assumption used.  For expenses, an insurer shall include per cent ofpremium dollars per policy and dollars per unit of benefits, if any;

(E)  A description and a table of theanticipated policy reserves and additional reserves to be held in each futureyear for active lives;

(F)  The estimated average annual premium perpolicy and the average issue age;

(G)  A statement as to whether underwriting isperformed at the time of application.  The statement shall indicate whetherunderwriting is used and, if used, the statement shall include a description ofthe type or types of underwriting used, such as medical underwriting orfunctional assessment underwriting.  Concerning a group policy, the statementshall indicate whether the enrollee or any dependent will be underwritten andwhen that underwriting occurs; and

(H)  A description of the effect of thelong-term care policy provision on the required premiums, nonforfeiture values,and reserves on the underlying insurance policy, both for active lives andthose in long-term care claim status.

(k)  Subsections (f) and (h) shall not apply togroup insurance policies as defined in paragraph (1) of the definition of"group long-term care insurance" in section 431:10H-104 where:

(1)  The policies insure two hundred fifty or morepersons and the policyholder has five thousand or more eligible employees of asingle employer; or

(2)  The policyholder, and not the certificateholders, pays a material portion of the premium, which shall not be less thantwenty per cent of the total premium for the group in the calendar year priorto the year a rate increase is filed.

(l)  "Exceptional increase" forpurposes of this section shall be as defined in section 431:10H-104. [L 2007, c233, pt of §4]