69O-157.301. Rate Increase Standards

(1) Rate increase filings for long term care insurance shall be filed in accordance with filing requirements and standards of Rule Chapters 69O-149 and 69O-157, F.A.C.

(2) The term “policies with similar coverage” has the same meaning as “similar policy forms” as defined in subsection 69O-157.103(17), F.A.C.

(3) The footnote following Section 627.9407, F.S., states that Section 11, Ch. 2006-254, L.O.F., provides that “[t]his act shall apply to long-term care insurance policies issued or renewed on or after July 1, 2006. For any long-term care insurance policy issued prior to July 1, 2006, the provisions of [Section 627.94076, F.S.] shall apply to such policy only upon renewal of such policy on or after July 1, 2008, and the policy shall so provide by endorsement to the policy.”

(4) Pursuant to the provisions of Section 627.9407(7)(c), F.S., for insurers that are currently actively marketing and issuing similar coverage, the rates resulting after a rate increase filing shall not exceed the insurer’s new business rate.

(5)(a) Section 627.9407(7)(c), F.S., requires that the office annually determine and publish the currently available new business rates for similar coverage being sold in Florida. The published new business rates represent the maximum annual rate that may be charged after a rate increase for insurers not currently issuing new coverage.

(b) The published rates shall be determined by first identifying those carriers currently issuing policies with similar coverage. For each of the similar coverage categories, the Florida new business earned premium, defined as first year premium in Florida, is determined for the prior calendar year. Those insurers reporting at least the top 80% of that earned premium, cumulatively, starting with the largest, will be used to tabulate the new business rate. The new business rate shall be the weighted average of the insurers’ rates, using the market share, as measured by first year premium in Florida, as the weight.

(c)1. The new business rates are for the standard underwriting class for the insurer. Standard underwriting class is the underwriting class with the most predominant sales, measured by number of policies, regardless of the name given to it by the insurer.

2. The new business rates for other underwriting classes shall bear the same relationship to the standard rate schedules that the insurer has filed and approved. For example, if an insurer’s preferred rate is 85% of its standard rate, the premium limit applicable to the rate increase for business sold as preferred will be 85% of the standard rate schedule.

(d)1. The published new business rates represent the particular benefit configuration listed. If an insurer has policies in force that have benefits different from the benefit used to determine the published rates, the insurer may contact the office for the new business rate that reflect the different benefits.

2. The office shall determine the new business rates for the requested benefit configuration in the same manner as it used for determining the published rates. The resulting rates shall be consistent with the published new business rates reflecting benefit differences only.

3. Insurers needing a different benefit configuration should make such request of the office in advance of a rate filing so as to give the office time to determine such rates and provide them to the insurer.

4. If the office is unable to determine the rates by a tabulation of the insurers currently selling similar coverage, the office shall use its best actuarial judgment in determining the new business rates using the information available from the insurers in the 80% market share. Alternatively in such cases, at the option of the insurer, the insurer may submit the results of a model used to price new long term care products by an actuarial consulting firm currently pricing long term care for other clients, who is independent of the insurer, acceptable to the office, and contracted by the insurer. The assumptions used shall be available to the office for review and approval. The model will be used to develop the new business pricing for the insurer’s policy benefit configuration, the new business pricing for the published benefit configuration, and to develop a factor which is the ratio of the insurer’s policy benefits to the published benefits. It is noted that the provisions of Section 627.9407(7)(c), F.S., provide that the differences shall be benefit differences only; all other provisions of the two policies being modeled shall be identical. Such factor, representing benefit differences only, shall be used to adjust the published new business rates. Independent, as used in this section, shall mean that the actuarial consulting firm or the actuary to be involved in the project has no relationship currently or for the last three years with the insurers for pricing, valuation, or other reviews.

(e) If the application of this rule results in different increases being applied to different plans within the filing, the requirements of subparagraph 69O-149.003(1)(a)4., F.A.C. shall apply.

(f) The published rates apply to sales in Hillsborough County. For all other counties, the rate from the published table should be adjusted by the insurer’s current area factor applicable in that county relative to the insurer’s area factor in Hillsborough County.

(g) The premium for all additional benefits provided in the policy or by rider to the policy shall be the same proportion of the base rates after any rate change as they were before such change.

Specific Authority 627.9408(1) FS. Law Implemented 627.9407(7) FS. History–New 11-1-07.