A team of regulators has posted a draft document that could eventually change how states decide whether an insurance company has enough assets backing its long-term care insurance policies.

The Long-Term Care Actuarial Working Group, part of the Kansas City, Missouri-based National Association of Insurance Commissioners, has posted the draft, Actuarial Guideline LTC, on its section of the NAIC website.

Related: Small blocks of long-term care insurance may get own rules

Regulators began developing the draft in an effort to create a uniform approach to testing long-term care insurance reserve adequacy, drafters say in a background note accompanying the draft.

The working group states in the draft text that the guidelines could apply to all long-term care insurance contracts, whether an insurer has written them itself or assumed responsibility for the contracts through a reinsurance agreement.

Insurers could have to use the guidelines when they report the reserves they had on Dec. 31, 2017. The reserve reports for Dec. 31, 2017, would come out in early 2018.

Some regulators have suggested that regulators should exempt small blocks of long-term care insurance business. The current draft states that the testing guidelines would apply only to blocks of in-force long-term care insurance contracts covering more than 1,000 policyholders as of the valuation date.

Testers would have to consider, and document, assumptions concerning matters such as mortality, morbidity, investment returns, future rate increases and policy lapsation.

Comments on the draft are due Nov. 5.

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