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REFERENCE TITLE: long‑term care insurance; rates; premiums |
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State of Arizona Senate Fifty-second Legislature Second Regular Session 2016
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SB 1441 |
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Introduced by Senator Barto
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AN ACT
Amending section 20‑1691.08, Arizona Revised Statutes; amending title 20, chapter 6, article 15, Arizona Revised Statutes, by adding section 20‑1691.13; relating to long‑term care insurance.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 20-1691.08, Arizona Revised Statutes, is amended to read:
20-1691.08. Rate and form review; disapproval; premium adjustments
A. A person shall not deliver or issue for delivery in this state any long‑term care insurance policy or rate unless the person has first filed the form or rate with the director and the director has approved the form or rate. Unless the director issues an order affirmatively approving or disapproving the form or rate within thirty days after filing, the form or rate is deemed approved. On written notice given to the insurer within the thirty day period, the director may extend the thirty day review period for up to fifteen additional days.
B. The director shall disapprove a rate or form if either:
1. The rate is not in compliance with this article or any rules adopted pursuant to this article.
2. The form contains provisions that are ambiguous, misleading or deceptive, that encourage misrepresentation of the coverage or that are contrary to this title or of any rule adopted pursuant to this title.
C. The department shall establish by rule formal procedures for the review and approval of long‑term care insurance premium adjustments. The procedures shall specify all documentation that is required to be filed with the director when filing for a premium adjustment, including the actuarial assumptions that are used by the insurer to determine the adjusted premium. The director:
1. When considering a premium adjustment, Shall review the actuarial assumptions used by the insurer to determine the adjusted premium, including whether the proposed adjusted premium is reasonably adequate to cover the future costs of services to be provided to the policyholders. In reviewing the soundness of the actuarial assumptions used by the insurer to determine the premium adjustment, the director May either:
(a) Use the services of an independent actuary who is not affiliated with the insurer and who has experience in long‑term care insurance pricing.
(b) Accept a review that was completed for another state if the review is for the same or substantially the same policy form or where any differences in benefits and premiums are not material and if the review has been completed within eighteen months after the premium adjustment request was filed pursuant to this section.
2. After reviewing the request for the premium adjustment, may do any of the following:
(a) Approve a single increase of the premium amount requested by the insurer if the insurer agrees to forego future increases for a period of three years after the date that the new premium increase is effective.
(b) Approve a series of scheduled premium increases that are actuarially equivalent to the amount requested by the insurer over the lifetime of the policy.
(c) Decline to approve any premium increase if the actuarial assumptions used by the insurer are found to be inadequate as a result of the independent actuary's findings or inconsistent with the department's rate review standards.
3. May require the insurer to limit any premium increase consistent with the loss‑ratio standards established by the department. The department may use different loss‑ratio standards for current policies than are used for prospective policies.
C. D. If the director disapproves a rate or form, the director shall send the insurer a written notice specifying the reason for disapproval. The insurer may request a hearing pursuant to title 41, chapter 6, article 10 to contest the disapproval. It is unlawful for the insurer to issue or use a rate or form that has been disapproved.
D. e. At any time after notice and for cause shown, the director may issue an order withdrawing approval of any form or rate for any reason listed in subsection B of this section. The insurer may request a hearing pursuant to title 41, chapter 6, article 10 to contest the director's order.
E. F. An insurer shall not issue or use a rate or form after the effective date of an order withdrawing approval.
F. G. The director, by order, may exempt from the requirements of this section for as long as the director deems proper any insurance rate or form specified in the order, to which, in the director's opinion, this section may not practicably be applied or the filing and approval of which are, in the director's opinion, not desirable or necessary for the protection of the public.
Sec. 2. Title 20, chapter 6, article 15, Arizona Revised Statutes, is amended by adding section 20-1691.13, to read:
20-1691.13. Notification; premium increases; change of benefits
An insurer shall notify its policyholders of any premium increase approved pursuant to section 20‑1691.08 or any change in benefits. The premium increase notification shall be filed with the department and shall contain all of the following:
1. The amount of the premium increase.
2. The implementation schedule of the premium increase.
3. Any benefit reduction or premium increase mitigation options that are available to the policyholder.
4. Clear disclosure that specifies the renewable nature of the policy and that premiums are subject to future increases.
5. An offer of any contingent benefit to the policyholder if the current policy lapses.
Sec. 3. Rulemaking exemption
For the purposes of implementing this act, the department of insurance is exempt from the rulemaking requirements of title 41, chapter 6, Arizona Revised Statutes, for one year after the effective date of this act.