Sec. 31.14.01.24. Reporting Requirements

A. Every insurer shall maintain records for each insurance producer of the:

(1) Insurance producer's amount of replacement sales as a percent of the insurance producer's total annual sales; and

(2) Amount of lapses of long-term care insurance policies sold by the insurance producer as a percent of the insurance producer's total annual sales.

B. Each insurer shall report annually by June 30 the 10 percent of its insurance producers with the greatest percentages of lapses and replacements as measured by §A of this regulation.

C. Reported replacement and lapse rates do not alone constitute a violation of insurance laws or necessarily imply wrongdoing.

D. The reports required under §§C, E, and F of this regulation are for the purpose of reviewing more closely insurance producer activities regarding the sale of long-term care insurance.

E. Every insurer shall report annually by June 30 the number of lapsed policies as a percent of its total annual sales and as a percent of its total number of policies in force as of the end of the preceding calendar year.

F. Every insurer shall report annually by June 30 the number of replacement policies sold as a percent of its total annual sales and as a percent of its total number of policies in force as of the preceding calendar year.

G. Qualified Long-Term Care Contracts.

(1) Every insurer shall report annually by June 30, for qualified long-term care insurance contracts, the number of claims denied for each class of business, expressed as a percentage of claims denied.

(2) The report required in §G(1) of this regulation shall be in the format specified in Regulation .32 of this chapter.

H. Annual Rate Certification Requirements for Rate Schedules Currently Marketed.

(1) This section applies to any long-term care policy issued in Maryland on or after September 1, 2017 that is currently marketed.

(2) An insurer shall submit an annual actuarial certification to the Commissioner in accordance with the following conditions:

(a) The certification shall be prepared, dated, and signed by a member of the American Academy of Actuaries;

(b) The certification shall contain one of the following conclusions:

(i) The premium rate schedule continues to be sufficient to cover anticipated costs under moderately adverse experience, and is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated; or

(ii) Margins for moderately adverse experience may no longer be sufficient;

(c) The certification shall be based on calendar year data;

(d) The certification shall be submitted annually not later than May 1 of each year starting in the second year following the year in which the initial rate schedules are first used;

(e) The certification shall contain a description of the review performed that led to the applicable conclusion in §H(2)(b) of this regulation; and

(f) If the certification contains the conclusion set forth in §H(2)(b)(ii) of this regulation, the insurer shall provide to the Commissioner a plan of action subject to the following conditions:

(i) The plan shall be submitted within 60 days of the date the actuarial certification is submitted; and

(ii) The plan shall include a time frame for the reestablishment of adequate margins for moderately adverse experience such that the ultimate premium rate schedule would be reasonably expected to be sustainable over the future life of the form with no future premium increases anticipated.

(3) Failure to comply with §H(2)(f) of this regulation constitutes grounds for the Commissioner to withdraw or modify approval of a form for future sales under Insurance Article, §12-205, Annotated Code of Maryland.

I. Annual Rate Certification Requirements for Rate Schedules That are No Longer Marketed.

(1) This section applies to any long-term care policy issued in Maryland on or after September 1, 2017 that is no longer marketed.

(2) An insurer shall submit an annual actuarial certification to the Commissioner in accordance with the following conditions:

(a) The certification shall be prepared, dated, and signed by a member of the American Academy of Actuaries;

(b) The certification shall contain one of the following conclusions:

(i) The premium rate schedule continues to be sufficient to cover anticipated costs under best estimate assumptions; or

(ii) The premium rate schedule may no longer be sufficient;

(c) The certification shall be based on calendar year data;

(d) The certification shall be submitted annually not later than May 1 of each year starting in the second year following the year in which the initial rate schedules are first used;

(e) The certification shall contain a description of the review performed that led to the applicable certification or statement in §I(2)(b) of this regulation.

(f) If the certification contains the conclusion set forth in §I(2)(b)(ii) if this regulation, the insurer shall provide to the Commissioner a plan of action subject to the following conditions:

(i) The plan shall be submitted within 60 days of the date the actuarial certification is submitted; and

(ii) The plan shall include a time frame for the reestablishment of adequate margins for moderately adverse experience.

J. Actuarial Memorandum.

(1) An actuarial memorandum to support the actuarial certifications required by §§H and I of this regulation shall be submitted as follows:

(a) The actuarial memorandum shall be dated and signed by the member of the American Academy of Actuaries who prepares the actuarial certification;

(b) The actuarial memorandum shall be submitted at least once every 3 years with the certification;

(c) The actuarial memorandum shall contain at least the following information:

(i) A detailed explanation of the data sources and review performed by the actuary before drawing the appropriate conclusion in §H(2)(b) or I(2)(b) of this regulation;

(ii) A complete description of experience assumptions and their relationship to the initial pricing assumptions;

(iii) A description of the credibility of the experience data; and

(iv) An explanation of the analysis and testing performed in determining the current presence of margins.