<html xmlns="http://www.w3.org/1999/xhtml"><head><meta charset="UTF-8" /><title></title><meta name="Generator" content="PowerTools for Open XML" /><style>span { white-space: pre-wrap; } p.sed143740-68af-468c-8864-29fb9067aaaeNormal { text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-top: 0; margin-left: 0; margin-right: 0; margin-bottom: .001pt; } span.sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000000 { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000001 { color: #0000FF; font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.sed143740-68af-468c-8864-29fb9067aaae000002 { font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } </style></head><body><div><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    </span><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000000">20:06:21:05.  Loss ratios.</span><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont"> This section applies to all long-term care insurance policies or certificates except those covered under § </span><a href="https://sdlegislature.gov/Rules?Rule=20:06:21:61"><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000001">20:06:21:61</span></a><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont"> and §§ </span><a href="https://sdlegislature.gov/Rules?Rule=20:06:21:63"><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000001">20:06:21:63</span></a><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont"> to </span><a href="https://sdlegislature.gov/Rules?Rule=20:06:21:69"><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000001">20:06:21:69</span></a><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">, inclusive.</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaae000002"> </span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    A long-term care insurance policy sold in this state shall meet or exceed the minimum loss ratio. The minimum loss ratio for an individual policy is 60 percent. The minimum loss ratio for a group policy is 65 percent. Long-term care insurance coverage sold through the mail or mass media advertising is considered an individual policy and not a group policy. The loss ratio shall be calculated based on earned premium and incurred loss in the aggregate. The premium shall be designed to develop at least the minimum loss ratio over the lifetime of the policy. An anticipated loss ratio shall be based on generally accepted actuarial principles and practices as published in the </span><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000000">Actuarial Standards of Practice</span><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">.</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaae000002"> </span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    All filings of rates and rating schedules shall demonstrate that actual and expected losses, in relation to premiums, comply with the requirements of this section.</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaae000002"> </span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    Loss ratio requirements do not apply to long-term care riders attached to or provisions included in life insurance policies.</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaae000002"> </span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    In evaluating the expected loss ratio, consideration shall be given to all relevant factors, including:</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaae000002"> </span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    (1)  Statistical credibility of incurred claims experience and earned premiums;</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    (2)  The period for which rates are computed to provide coverage;</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    (3)  Experienced and projected trends;</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    (4)  Concentration of experience within early policy duration;</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    (5)  Expected claim fluctuation;</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    (6)  Experience refunds, adjustments, or dividends;</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    (7)  Renewability features;</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    (8)  All appropriate expense factors;</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    (9)  Interest;</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    (10)  Experimental nature of the coverage;</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    (11)  Policy reserves;</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    (12)  Mix of business by risk classification; and</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    (13)  Product features such as long elimination periods, high deductibles, and high maximum limits.</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaae000002"> </span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    </span><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000000">Source:</span><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont"> 16 SDR 208, effective June 3, 1990; 22 SDR 106, effective February 18, 1996; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    </span><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000000">General Authority:</span><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont"> SDCL </span><a href="https://sdlegislature.gov/Statutes?Statute=58-17B-8"><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000001">58-17B-8</span></a><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">.</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    </span><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000000">Law Implemented:</span><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont"> SDCL </span><a href="https://sdlegislature.gov/Statutes?Statute=58-17B-8"><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000001">58-17B-8</span></a><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">.</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaae000002"> </span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">    </span><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000000">Reference:</span><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont"> </span><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont-000000">Actuarial Standards of Practice</span><span class="sed143740-68af-468c-8864-29fb9067aaaeDefaultParagraphFont">, American Academy of Actuaries. Copies may be obtained free of charge on the website: http:/www.actuarialstandardsboard.org/asops.htm.</span></p><p dir="ltr" class="sed143740-68af-468c-8864-29fb9067aaaeNormal"><span xml:space="preserve" class="sed143740-68af-468c-8864-29fb9067aaae000002"> </span></p></div></body></html>