BILL NUMBER: AB 389	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Saldana

                        FEBRUARY 23, 2009

   An act to amend Section 10236.13 of the Insurance Code, relating
to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 389, as introduced, Saldana. Long-term care insurance.
   Existing law prohibits an insurer from increasing the premium for
an individual or group long-term care insurance policy or a specified
certificate unless the insurer received prior approval from the
Insurance Commissioner. Existing law requires the insurer to submit
to the commissioner all proposed premium rate schedule increases that
include certain specified information, such as an actuarial
memorandum justifying the rate schedule change and a statement that
renewal premium rate schedules are not greater than new business
premium rate schedules.
   This bill would make a technical, nonsubstantive change.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 10236.13 of the Insurance Code is amended to
read:
   10236.13.  No insurer may increase the premium for an individual
or group long-term care insurance policy or certificate approved for
sale under this chapter unless the insurer has received prior
approval for the increase from the commissioner.
   The insurer shall submit to the commissioner for approval all
proposed premium rate schedule increases, including  at least
  , but not limited to,  all of the following
information:
   (a) Certification by an actuary, who is a member of the American
Society of Actuaries and who is in good standing with that society,
that:
   (1) If the requested premium rate schedule increase is implemented
and the underlying assumptions, which reflect moderately adverse
conditions, are realized, no further premium rate schedule increases
are anticipated.
   (2) The premium rate filing is in compliance with the provisions
of this section.
   (b) An actuarial memorandum justifying the rate schedule change
request that includes all of the following:
   (1) Lifetime projections of earned premiums and incurred claims
based on the filed premium rate schedule increase, and the method and
assumptions used in determining the projected values, including
reflection of any assumptions that deviate from those used for
pricing other forms currently available for sale.
   (A) Annual values for the five years preceding and the three years
following the valuation date shall be provided separately.
   (B) The projections shall include the development of the lifetime
loss ratio.
   (C) For policies issued with premium rate schedules approved under
Section 10236.11, the projections shall demonstrate compliance with
subdivision (a) of Section 10236.14. For all other policies, the
projections shall demonstrate compliance with Section 10236.1.
   (D) In the event the commissioner determines that a premium rate
increase is justified due to changes in laws or regulations that are
retroactively applicable to long-term care insurance previously sold
in this state, then:
   (i) The projected experience should be limited to the increases in
claims expenses attributable to the changes in law or regulations.
   (ii) In the event the commissioner determines that potential
offsets to higher claims costs may exist, the insurer shall be
required to use appropriate net projected experience.
   (2) Disclosure of how reserves have been incorporated in this rate
increase.
   (3) Disclosure of the analysis performed to determine why a rate
adjustment is necessary, which pricing assumptions were not realized
and why, and what other actions taken by the company have been relied
on by the actuary.
   (4) A statement that policy design, underwriting, and claims
adjudication practices have been taken into consideration.
   (5) In the event that it is necessary to maintain consistent
premium rates for new certificates and certificates receiving a rate
increase, the insurer shall file composite rates reflecting
projections of new certificates.
   (c) A statement that renewal premium rate schedules are not
greater than new business premium rate schedules except for
differences attributable to benefits, unless sufficient justification
is provided to the commissioner.
   (d) Sufficient information for approval of the premium rate
schedule increase by the commissioner.
   (e) The provisions of this section are applicable to all
individual and group policies issued in this state on or after July
1, 2002.