Ch. 35 1997 LAWS OF MARYLAND

18-115. REASONABLE LOSS RATIOS.

(A) IN GENERAL.

BENEFITS UNDER A POLICY OR CERTIFICATE OF LONG-TERM CARE
INSURANCE SHALL BE CONSIDERED REASONABLE IN RELATION TO PREMIUMS IF
THE EXPECTED LOSS RATIO IS AT LEAST 60% AND IS CALCULATED IN A MANNER
THAT PROVIDES FOR ADEQUATE RESERVING OF THE LONG-TERM CARE
INSURANCE RISK.

(B) FACTORS FOR EVALUATION OF LOSS RATIOS.

IN EVALUATING THE EXPECTED AND ACTUAL LOSS RATIOS, THE
COMMISSIONER SHALL CONSIDER:

(1) THE 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) THE CONCENTRATION OF EXPERIENCE WITHIN EARLY POLICY
DURATION;

(5) EXPECTED CLAIM FLUCTUATION;

(6) EXPERIENCED REFUNDS, ADJUSTMENTS, OR DIVIDENDS;

(7) RENEWABILITY FEATURES;

(8) ALL APPROPRIATE EXPENSE FACTORS;

(9) INTEREST;

(10) THE EXPERIMENTAL NATURE OF THE COVERAGE;

(11) POLICY RESERVES;

(12) THE MIX OF BUSINESS BY RISK CLASSIFICATION; AND

(13) PRODUCT FEATURES, INCLUDING LONG ELIMINATION PERIODS,
HIGH DEDUCTIBLES, AND HIGH MAXIMUM LIMITS.

REVISOR'S NOTE: This section is new language derived without substantive
change from former Art. 48A, § 647.3.

Defined terms: "Commissioner" § 1-101
"Long-term care insurance" § 18-101
"Loss ratio" § 18-101
"Policy" § 1-101
"Premium" § 1-101

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