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NAIC Panels Discuss LTC Morbidity Project, PBR Valuation Manual Section

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The American Academy of Actuaries told state regulators it will be developing long term care morbidity tables.

Members of the Accident and Health Working Group at the National Association of Insurance Commissioners, Kansas City, Mo., heard about the LTC insurance valuation morbidity tables project early this week during a working group teleconference.

The AAA, Washington, wants to use insurance company LTC claims data collected in 2005 for the Society of Actuaries, Schaumburg, Ill., to develop the tables, Robert Yee, chairman of the AAA State LTC Task Force and chair of the SOA Valuation Committee, writes in a letter to Steven Ostlund, chairman of the NAIC working group.

The LTC insurance morbidity tables would be the first of their kind, because a significant amount of claims data for policies with comprehensive coverage is becoming available for the first time, Yee writes.

The AAA would get the data the SOA used from MIB Group Inc., Braintree, Mass.

“Because of the anticipated tremendous growth in claims in the next 5 to 10 years, future tables will be vast improvements over this initial effort,” Yee writes.

The first tables will include sections for home health care-only coverage, nursing home-only coverage, and comprehensive coverage that covers both nursing home care and home health care.

The home care-only and nursing home-only sections will provide data on incidence rates and claim termination rates.

The comprehensive coverage table will provide data on incidence rates and claim termination rates both for home health care and for facility care.

The incidence-rate data may show how results vary by gender and by marital status at issue, Yee writes.
Claim termination rates may be segmented by variables such as claim duration, gender, age group at time of claim, and other factors, Yee writes.

The AAA hopes to have tables ready to recommend to the NAIC by July 2011.

Other NAIC panels also held teleconferences this week.

Members of the Life and Health Actuarial Task Force discussed proposed amendments to VM-20, a valuation manual section that would set requirements for principles-based reserves for life products. The LHATF has exposed a working draft of the manual section that does not yet qualify for exposure draft status. One section still under development deals with determination of net premium reserves. A net premium reserve section is also undergoing major revisions. Principles-based reserving requires use of modern statistical forecasting techniques, and a proposed manual section appendix describes 16 scenarios to be used in the forecasting process.

The LHATF may cover an exposure draft of VM-25, a valuation manual dealing with minimum health insurance reserves, during a teleconference set to take place Tuesday.

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