Regulations of Connecticut State Agencies
(a) General.
(1) Claim reserves are required for all incurred but unpaid claims on all health insurance policies.
(2) Appropriate claim expense reserves are required with respect to the estimated expense of settlement of all incurred but unpaid claims.
(3) All such reserves for prior valuation years are to be tested for adequacy and reasonableness along the lines of claim runoff schedules in accordance with the statutory financial statement including consideration of any residual unpaid liability.
(b) Minimum Standards for Claim Reserves.
(1) Disability Income.
(A) Interest. The maximum interest rate for claim reserves is specified in Appendix A.
(B) Morbidity. Minimum standards with respect to morbidity are those specified in Appendix A, except that, at the option of the insurer for the portion of claims payable within (i) three years for group disability income claims, or (ii) two years for all other disability claims, from the date of disablement, reserves may be based on the insurer's experience to the extent that such experience is credible, or, with the approval of the commissioner, upon other assumptions designed to place a sound value on the liabilities.
(C) Duration of Disablement. For contracts with an elimination period, the duration of disablement should be measured as dating from the time that benefits would have begun to accrue had there been no elimination period.
(2) All Other Benefits.
(A) Interest. The maximum interest rate for claim reserves is specified in Appendix A.
(B) Morbidity or Other Contingency. The reserve should be based on the insurer's experience, if such experience is considered credible, or upon other assumptions designed to place a sound value on the liabilities.
(c) Claim Reserve Methods Generally. Any generally accepted or reasonable actuarial method or combination of methods may be used to estimate all claim liabilities. The methods used for estimating liabilities generally may be aggregate methods, or various reserve items may be separately valued. Approximations based on groupings and averages may also be employed. Adequacy of the claim reserves, however, shall be determined in the aggregate.
(Effective September 28, 1993; Amended December 2, 1998)