69O-154.204. Specific Minimum Standards for Morbidity, Mortality and Interest

Specific minimum standards for morbidity, mortality and interest which apply to claim reserves according to year of incurral and to contract reserves according to year of issue:

(1) Morbidity.

(a) Minimum morbidity standards for valuation of specified individual contract health insurance benefits are as follows:

1. Disability Income Benefits Due to Accident or Sickness.

a. Contract Reserves:

(I) Contracts issued on or after January 1, 1965, and prior to January 1, 1998: The 1964 Commissioners Disability Table (64 CDT), incorporated by reference in Rule 69O-154.210, F.A.C., or a table acceptable to the Department as specified in paragraph 69O-154.204(1)(c), F.A.C.

(II) Contracts issued on or after January 1, 1999:

(A) The 1985 Commissioners Individual Disability Tables A (85CIDA), incorporated by reference in Rule 69O-154.210, F.A.C; or

(B) The 1985 Commissioners Individual Disability Tables B (85CIDB), incorporated by reference in Rule 69O-154.210, F.A.C.

(III) Contracts issued on or after January 1, 1998 and prior to January 1, 1999 inclusive: Optional use of either the 1964 Table or the 1985 Tables, or a table acceptable to the Department as specified in paragraph 69O-154.204(1)(c), F.A.C.

(IV) Each insurer may elect, with respect to all individual contracts issued in any one statement year, whether it will use Tables A or Tables B as the minimum standard. The insurer shall, however, elect to use the other tables with respect to any subsequent statement year.

b. Claim Reserves:

(I) For claims incurred on or before December 31, 2002, the minimum morbidity standard in effect for contract reserves on currently issued contracts as of the date the claim is incurred.

(II)(A) For claims incurred on or after January 1, 2003, the 1985 Commissioners Individual Disability Table A (85CIDA) with claim termination rates multiplied by the following adjustment factors:

Duration	Adjustment Factor	Adjusted Termination Rates*
Week
1	0.366	0.04831
2	0.366	0.04172
3	0.366	0.04063
4	0.366	0.04355
5	0.365	0.04088
6	0.365	0.04271
7	0.365	0.04380
8	0.365	0.04344
9	0.370	0.04292
10	0.370	0.04107
11	0.370	0.03848
12	0.370	0.03478
13	0.370	0.03034
Month
4	0.391	0.08758
5	0.371	0.07346
6	0.435	0.07531
7	0.500	0.07245
8	0.564	0.06655
9	0.613	0.05520
10	0.663	0.04705
11	0.712	0.04486
12	0.756	0.04309
13	0.800	0.04080
14	0.844	0.03882
15	0.888	0.03730
16	0.932	0.03448
17	0.976	0.03026
18	1.020	0.02856
19	1.049	0.02518
20	1.078	0.02264
21	1.107	0.02104
22	1.136	0.01932
23	1.165	0.01865
24	1.195	0.01792
Year
3	1.369	0.16839
4	1.204	0.10114
5	1.199	0.07434
6 and later	1.000	**

*The adjusted termination rates derived from the application of the adjustment factors to the DTS Valuation Table termination rates shown in exhibits 3a, 3b, 3c, 4, and 5 (Transactions of the Society of Actuaries (TSA) XXXVII, pp. 457-463) is displayed. The adjustment factors for age, elimination period, class, sex, and cause displayed in exhibits 3a, 3b, 3c, and 4 should be applied to the adjusted termination rates shown in this table.

**Applicable DTS Valuation Table duration rate from exhibits 3c and 4 (TSA XXXVII, pp. 462-463).

(B) The 85CIDA table so adjusted for the computation of claim reserves shall be known as 85CIDC (The 1985 Commissioners Individual Disability Table C).

2. Hospital Benefits, Surgical Benefits and Maternity Benefits (Scheduled benefits or fixed time period benefits only).

a. Contract Reserves:

(I) Contracts issued on or after January 1, 1955, and before January 1, 1982: The 1956 Intercompany Hospital-Surgical Tables, incorporated by reference in Rule 69O-154.210, F.A.C., or a table acceptable to the Department as specified in paragraph 69O-154.204(1)(c), F.A.C.

(II) Contracts issued on or after January 1, 1982: The 1974 Medical Expense Tables, Table A, Transactions of the Society of Actuaries, Volume XXX, pg. 63, incorporated by reference in Rule 69O-154.210, F.A.C., or a table acceptable to the Department as specified in paragraph 69O-154.204(1)(c), F.A.C. Refer to the paper (in the same volume, pg. 9) to which this table is appended, including its discussions, for methods of adjustment for benefits not directly valued in Table A: “Development of the 1974 Medical Expense Benefits,” Houghton and Wolf, incorporated by reference in Rule 69O-154.210, F.A.C.

b. Claim Reserves: No specific standard. See sub-subparagraph 5., below entitled “Other Individual Contract Benefits”.

3. Cancer Expense Benefits (Scheduled benefits or fixed time period benefits only).

a. Contract Reserves:

(i) Contracts issued on or after January 1, 1986, and prior to January 1, 1999: The 1985 NAIC Cancer Claim Cost Tables, incorporated by reference in Rule 69O-154.210, F.A.C., or a table acceptable to the Department as specified in paragraph 69O-154.204(1)(c), F.A.C.

(i) Contracts issued on or after January 1, 1999: The 1985 NAIC Cancer Claim Cost Tables, incorporated by reference in Rule 69O-154.210, F.A.C.

b. Claim Reserves: No specific standard. See subparagraph 5., below entitled “Other Individual Contract Benefits”.

4. Accidental Death Benefits.

a. Contract Reserves: Contracts issued on or after January 1, 1965: The 1959 Accidental Death Benefits Table, incorporated by reference in Rule 69O-154.210, F.A.C.

b. Claim Reserves: Actual amount incurred.

5. Single Premium Credit Disability.

a. Contract Reserves:

(I) For contracts issued on or after January 1, 2003:

(A) For plans having less than a 30 day elimination period, the 1985 Commissioners Individual Disability Table A (85CIDA) with claim incidence rates increased by 12 percent.

(B) For plans having a 30 day and greater elimination period, the 85CIDA for a 14 day elimination period with the adjustment in sub-sub-subparagraph (A).

(II) For contracts issued prior to January 1, 2003, each insurer may elect either sub-sub-subparagraphs (A) or (B) to use as the minimum standard. Once an insurer elects to calculate reserves for all contracts on the standard defined in sub-subparagraph (I), all future valuations must be on that basis.

(A) The minimum morbidity standard in effect for contract reserves on currently issued contracts, as of the date the contract was issued; or

(B) The standard as defined in sub-subparagraph (I), applied to all contracts.

b. Claim Reserves: Claim reserves are to be determined as provided in paragraph 69O-154.203(1)(c), F.A.C.

6. Other Individual Contract Benefits.

a. Contract Reserves: For all other individual contract benefits, morbidity assumptions shall be determined as provided in the reserve standards.

b. Claim Reserves: For all benefits other than disability, claim reserves shall be determined as provided in the standards.

(b) Minimum morbidity standards for valuation of specified group contract health insurance benefits shall be as follows:

1. Disability Income Benefits Due to Accident or Sickness where Rules 69O-154.201 ‒ 69O-154.210 reference 69O-154.204, F.A.C.; otherwise Actuarial Guideline XLVII, as included in the most current version of the NAIC Accounting Practices and Procedures Manual adopted by subsection 69O-137.001(4), F.A.C.

a. Contract Reserves:

(I) Contracts issued prior to January 1, 1999: The same basis, if any, as that employed by the insurer as of January 1, 1999 or a table acceptable to the Department as specified in paragraph 69O-154.204(1)(c), F.A.C.

(II) Contracts issued on or after January 1, 1999: The 1987 Commissioners Group Disability Income Table (87CGDT).

b. Claim Reserves:

(I) For claims incurred on or after January 1, 1999: The 87CGDT.

(II) For claims incurred prior to January 1, 1999: Use of the 87CGDT is optional.

2. Single Premium Credit Disability.

a. Contract Reserves:

(I) For contracts issued on or after January 1, 2003:

(A) For plans having less than a 30 day elimination period, the 1985 Commissioners Individual Disability Table A (85CIDA) with claim incidence rates increased by 12 percent.

(B) For plans having a 30 day and greater elimination period, the 85CIDA for a 14 day elimination period with the adjustment in (A).

(II) For contracts issued prior to January 1, 2003, each insurer may elect to use either sub-subparagraph (I) or (II) as the minimum standard. Once an insurer elects to calculate reserves for all contracts on the standard defined in sub-subparagraph (I), all future valuations must be on that basis.

(A) The minimum morbidity standard in effect for contract reserves on currently issued contracts, as of the date the contract was issued, or

(B) The standard as defined in sub-subparagraph (I), applied to all contracts.

b. Claim Reserves: Claim reserves are to be determined as provided in paragraph 69O-154.203(1)(c), F.A.C.

3. Other Group Contract Benefits.

a. Contract Reserves: For all other group contract benefits, morbidity assumptions shall be determined as provided in the reserve standards.

b. Claim Reserves: For all benefits other than disability, claim reserves shall be determined as provided in the standards.

(c) A table of factors used to value contract reserves for policies issued on or before December 31, 1998 or used to value claim reserves incurred on or before December 31, 1998, shall be acceptable to the Office if it has been accepted for valuation by the Commissioner of the state where the company is domiciled. If the insurer is a Florida domiciled insurer it will be acceptable if the valuation is done in accordance with commonly accepted actuarial practice.

(2) Interest.

(a) For contract reserves, the maximum interest rate is the maximum rate specified in Section 625.121(6)(a), F.S., in the valuation of whole life insurance with an interest guarantee period greater than twenty years issued on the same date as the health insurance contract. An interest rate used to value contract reserves for policies issued on or before December 31, 1998 or used to value claim reserves incurred on or before December 31, 1998, shall be acceptable to the Office if it has been accepted for valuation by the Commissioner of the state where the company is domiciled.

(b) For claim reserves on policies that require contract reserves, the maximum interest rate is the maximum rate specified in Section 625.121(6)(a), F.S., in the valuation of whole life insurance with an interest guarantee period greater than twenty years issued on the same date as the claim incurral date.

(c) For claim reserves on policies not requiring contract reserves, the maximum interest rate is the maximum rate specified in Section 625.121(5)(a)2., F.A.C., in the valuation of single premium immediate annuities issued on the same date as the claim incurral date, reduced by one hundred basis points.

(3) Mortality.

(a) For all individual policies or group certificates issued before January 1, 1999, the mortality basis used shall be according to a table (but without use of selection factors) permitted by law for the valuation of whole life insurance issued on the same date as the health insurance contract or a table acceptable to the Office as specified in paragraph (3)(d) below.

(b) For all individual policies or group certificates other than long-term care insurance issued on or after January 1, 1999, the mortality basis used shall be according to a table of rates (but without use of selection factors) specified in Section 625.121(5)(a)2., F.S., for the valuation of whole life insurance issued on the same date as the health insurance contract.

(c)1. For long-term care insurance individual policies or group certificates issued on or after January 1, 1999, the mortality basis used shall be the 1983 Group Annuity Mortality Table, incorporated by reference in Rule 69O-154.210, F.A.C., without projection.

2. For long-term care insurance individual policies or group certificates issued on or after January 1, 2005, the mortality basis used shall be the 1994 Group Annuity Mortality Table, which is the 1994 GAR Table without projection, qx1994, incorporated by reference in Rule 69O-162.108, F.A.C.

(d) A table of mortality factors used for the purpose of valuing contract reserves or claim reserves for policies issued before January 1, 1999, shall be acceptable to the Office if it has been accepted for that purpose by the commissioner of the state where the insurer is domiciled. If the insurer is a Florida domiciled insurer, the mortality factors shall be acceptable if the valuation is done in accordance with commonly accepted actuarial practice.

(e) For single premium credit insurance using the adjusted 85 CIDA table, no separate mortality shall be assumed.

Rulemaking Authority 624.308(1), 625.121(14), 625.081 FS. Law Implemented 624.307(1), 625.081, 625.121 FS. History–New 4-14-99, Formerly 4-154.204, Amended 3-1-04, 4-7-05, 11-2-06, 1-25-16.