Rule 69O-149.002 is being amended to adopt the recent National Association of Insurance Commissioners (NAIC) interstate compact standard for defining incidental for accelerated death benefits.

DEPARTMENT OF FINANCIAL SERVICES
OIR – Insurance Regulation

RULE NO: RULE TITLE
69O-149.002: Scope and Applicability
PURPOSE AND EFFECT: Rule 69O-149.002 is being amended to adopt the recent National Association of Insurance Commissioners (NAIC) interstate compact standard for defining incidental for accelerated death benefits.
SUMMARY: If the cost of an accelerated death benefit is incidental, less than 10% of the cost of the contract as a whole, the accelerated rider would not be subject to the health standards. These include such riders as accelerated long-term care and accelerated death benefits due to heart or other critical conditions. The standard provides for the formula to be used to meet the test.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: No Statement of Estimated Regulatory Cost was prepared.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
SPECIFIC AUTHORITY: 624.308(1), 627.410(6)(b) FS.
LAW IMPLEMENTED: 624.307(1), 627.402, 627.410(1), (2), (6), (7), 627.411(1)(e), (2), 627.6515(2)(a), 627.6699 FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE,TIME AND PLACE SHOWN BELOW(IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):
DATE AND TIME: April 11, 2007, 9:30 a.m.
PLACE: Room 142, Larson Building, 200 East Gaines Street, Tallahassee, Florida
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 calendar days before the workshop/meeting by contacting: Tracie Lambright, Life and Health Product Review, Office of Insurance Regulation, E-mail: [e-mail]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Tracie Lambright, Life and Health Product Review, Office of Insurance Regulation, E-mail: [e-mail]

THE FULL TEXT OF THE PROPOSED RULE IS:

69O-149.002 Scope and Applicability.

(1) through (5) No change.

(6) Pursuant to the provisions of Section 627.410(6)(b), F.S., rate filings required by Rule 69O-149.003, F.A.C. and ARC filings required by Rule 69O-149.007, F.A.C., are not required to be made for the following; however, the rating standards contained in this Part I and applicable statutes shall continue to apply as if the rate schedules were required to be filed for approval:

(a)1. Annually rated group health insurance policies as defined by Section 627.652(1), F.S., including blanket insurance as defined by Section 627.659, F.S., issued in this state that provide availability of coverage only to groups with 51 or more employees/members.

(b)2. This filing exemption does not apply to franchise policies issued pursuant to Section 627.663, F.S.

(c)3. This filing exemption does not apply to stop-loss policy forms, unless the policy is issued only to employers with 51 or more employees.

(7)(a)(b)1. Forms that provide for the acceleration of the benefits of a life insurance policy that are is incidental to the total life insurance coverage are not subject to the annual rate or ARC filing requirements of Section 627.410, F.S., or these rules. The insurer is required to submit an actuarial demonstration with the initial filing for approval demonstrating such incidental compliance.

(b)2. The acceleration is considered incidental if the value of the accelerated benefit is less than 10 percent of the total value of the benefits provided by the life insurance coverage. These values shall be measured as: a. tThe present values of the benefits determined as of the date of issue, determined according to the formula (NSP2-NSP1)/NSP1, applied over a range of underwriting classes and plans at which the benefit is being made available, is not in any case greater than 10%, where:; or

1. NSP1 and NSP2 are determined using an effective annual interest rate of 6%.

2. NSP1 is the net single premium for the base policy benefits assuming there is no accelerated death benefit.

3. NSP2 is the net single premium for the base policy benefits assuming that the full death benefit is paid at time of death or the occurrence of the non-death accelerated death benefit trigger.

b. The relationship between the premiums if the premiums are separable and fixed at issue.

(c) If a separate premium or cost of insurance (COI) charge is the only charge being charged for the accelerated benefit provided, the ratio of the present value of the accelerated benefit premiums or COI charges over the life of the policy to the present value of the policy premiums or COI charges exclusive of any riders, does not exceed 10%, the present values shall be determined using an effective annual interest rate of 6%.

(d) Upon request of the Office, the insurer shall provide an actuarial demonstration that the accelerated death benefit continues to meet these standards. If it is determined that the accelerated death benefit fails to comply with these standards, the provisions of these rules shall apply.

Specific Authority 624.308(1), 627.410(6)(b) FS. Law Implemented 624.307(1), 627.402, 627.410(1), (2), (6), (7), 627.411(1)(e), (2), 627.6515(2)(a), 627.6699 FS. History–New 7-1-85, Formerly 4-58.02, 4-58.002, Amended 4-18-94, 4-9-95, 10-27-02, Formerly 4-149.002, Amended 5-18-04,_________.

NAME OF PERSON ORIGINATING PROPOSED RULE: Monica Rutkowski, Director, Life and Health Product Review, Office of Insurance Regulation
NAME OF SUPERVISOR OR PERSON WHO APPROVED THE PROPOSED RULE: Rich Robleto, Deputy Commissioner, Office of Insurance Regulation
DATE PROPOSED RULE APPROVED BY AGENCY HEAD: February 6, 2007
DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: January 12, 2007