trending Market Intelligence /marketintelligence/en/news-insights/trending/Jw2f2E14hHz4Pft41kscNA2 content
Log in to other products

Login to Market Intelligence Platform


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

NAIC: LTC blocks to be held to more robust, uniform reserve standards

Infrastructure Issues: Tools to Dig Deep on Potential Risks

Part Two IFRS 9 Blog Series: The Need to Upgrade Analytical Tools

2018 US Property Casualty Insurance Market Report


Fintech Funding Flows To Insurtech In February

NAIC: LTC blocks to be held to more robust, uniform reserve standards

The National Association of Insurance Commissioners has adopted a new actuarial guideline to apply to the calculation of long-term care insurance reserves so state regulators can better evaluate the solvency of companies with sizable LTC blocks.

The practice could potentially require some companies, whether they have closed or open blocks of LTC business, to up their reserves if the required analysis reveals a reserve deficiency.

The NAIC voted last week to adopt the new guideline after months of discussion among subgroups. State insurance regulators had voiced concern over a lack of uniformity in reserve adequacy.

The current reserve adequacy testing "does not provide comfort on closed blocks of business," said Maryland Insurance Commissioner Al Redmer in proposing adoption of the new guidance at the meeting. Redmer heads the NAIC's executive-level task force on LTC, created earlier this year. Closed blocks represent more than 55% of earned premiums and roughly 60% of cumulative total claims paid, according to a May 2016 research paper from the NAIC and its Center for Insurance Policy and Research.

In addition to requiring a uniform approach to actuarial assumptions on a company's potential to get future LTC premium rate increases, the NAIC wants to better understand whether current LTC reserves are adequate.

The guidance includes new requirements for insurers to document their actuarial assumptions associated with all key LTC risks and their testing results. For instance, companies' premium rate increase assumptions must not be pie-in-the-sky hopes but ones that have been approved by management and are highly likely to be undertaken and approved by regulators. Regulators made clear in the NAIC guideline language that they want to see documentation of this.

The new guidance instructs insurers to conduct their asset adequacy analysis either in the form of a gross premium valuation or in a "more robust" way, such as through cash-flow testing, according to NAIC committee work materials. Unlike the gross premium valuation method, cash-flow testing allows a reserve deficiency in one LTC block to be offset by another.

The new guideline is effective for reserves reported with the Dec. 31, 2017, financial statement and all subsequent statements. It applies to any company with over 10,000 in-force lives covered by LTC insurance contracts, whether directly written or assumed through reinsurance. The new guideline is not expected to result in significant reserve increases for year-end 2017, but could lead to increased reserves for year-end 2018 and beyond, according to actuaries familiar with the guidance.

The new guideline has already been adopted by the NAIC's Health Insurance and Managed Care Committee, and the Health Actuarial Task Force.