Michigan Laws 500.3927 – Reasonableness of benefits relative to premiums; expected loss ratio; evaluation of factors; applicability of section
Current as of: 2023 | Check for updates
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Terms Used In Michigan Laws 500.3927
- Long-term care insurance: means an individual or group insurance policy, certificate, or rider advertised, marketed, offered, or designed to provide coverage for at least 12 consecutive months for each covered person on an expense-incurred, indemnity, prepaid, or other basis for 1 or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, personal, or custodial care services provided in a setting, including an assisted living facility operating legally in this state, but not including an acute care unit of a hospital. See Michigan Laws 500.3901
- Policy: means an insurance policy or certificate, rider, or endorsement delivered or issued for delivery in this state by an insurer or subsidiary of a nonprofit health care corporation. See Michigan Laws 500.3901
(1) Benefits under individual long-term care insurance policies shall be considered reasonable in relation to premiums provided the expected loss ratio is at least 60%, calculated in a manner that provides for adequate reserving of the long-term care insurance risk. In evaluating the expected loss ratio, due consideration shall be given to all relevant factors, including:
(a) Statistical credibility of incurred claims experience and earned premiums.
(b) The period for which rates are computed to provide coverage.
(c) Experienced and projected trends.
(d) Concentration of experience within early policy duration.
(e) Expected claim fluctuation.
(f) Experience refunds, adjustments, or dividends.
(g) Renewability features.
(h) All appropriate expense factors.
(i) Interest.
(j) Experimental nature of the coverage.
(k) Policy reserves.
(l) Mix of business by risk classification.
(m) Product features such as long elimination periods, high deductibles, and high maximum limits.
(n) Premiums charged and losses incurred for other similar policies.
(2) This section does not apply to fixed indivisible premium life insurance policies that fund long-term care benefits entirely by accelerating the death benefit.
(3) This section applies to all long-term care insurance policies or certificates except those described in sections 3926(1) and 3926a(1) and (2).