<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.sb75be79d-6121-46ff-bc3f-41f159673c6bP0 { margin-top: 0; margin-bottom: 0; margin-left: 0; margin-right: 0; text-indent: 0.00in; text-align: justify; background: white; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; } span.sb75be79d-6121-46ff-bc3f-41f159673c6bC0 { background: white; font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.sb75be79d-6121-46ff-bc3f-41f159673c6bC0-000000 { color: #0000FF; background: white; font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.sb75be79d-6121-46ff-bc3f-41f159673c6bC0-000001 { background: white; font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.sb75be79d-6121-46ff-bc3f-41f159673c6b000002 { background: white; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.sb75be79d-6121-46ff-bc3f-41f159673c6bC0-000003 { color: #0000FF; background: white; font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } </style></head><body><div><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">    </span><a href="https://sdlegislature.gov/Rules?Rule=20:06:21:61"><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0-000000">20:06:21:61</span></a><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0-000001">.  Initial filing requirements.</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">    (1)  This section applies to any long-term care policy issued in this state on or after November 1, 2002;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">    (2)  An insurer shall provide the information listed in this section to the director 30 days prior to making a long-term care insurance form available for sale:</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">        (a)  A copy of the disclosure documents required in § </span><a href="https://sdlegislature.gov/Rules?Rule=20:06:21:60"><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0-000003">20:06:21:60</span></a><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">; and</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">        (b)  An actuarial certification consisting of at least the following:</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">            (i)    A statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">            (ii)   A statement that the policy design and coverage provided have been reviewed and taken into consideration;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">            (iii)  A statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">            (iv)  A complete description of the basis for contract reserves that are anticipated to be held under the form, to include:</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">                (I)    Sufficient detail or sample calculations provided so as to have a complete depiction of the reserve amounts to be held;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">                (II)   A statement that the assumptions used for reserves contain reasonable margins for adverse experience;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">                (III)  A statement that the net valuation premium for renewal years does not increase (except for attained-age rating where permitted); and</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">                (IV)  A statement that the difference between the gross premium and the net valuation premium for renewal years is sufficient to cover expected renewal expenses; or if such a statement cannot be made, a complete description of the situations where this does not occur;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">                    (A)  An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">                    (B)  If the gross premiums for certain age groups appear to be inconsistent with this requirement, the director may request a demonstration under subdivision (3) of this section based on a standard age distribution; and</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">            (v)(I)    A statement that the premium rate schedule is not less than the premium rate schedule for existing similar policy forms also available from the insurer except for reasonable differences attributable to benefits; or</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">                (II)  A comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">            </span><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">(vi)  A statement that the premiums contain at least the minimum margin for moderately adverse experience defined in subdivision (2)(b)(vi)(I) or the specification of and justification for a lower margin as required by subdivision (2)(b)(vi)(II);</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">                (I)  A composite margin shall not be less than 10% of lifetime claims;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">                (II)  A composite margin that is less than 10% may be justified in uncommon circumstances. The proposed amount, full justification of the proposed amount, and methods to monitor developing experience that would be the bases for withdrawal of approval for such lower margins must be submitted;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">                (III)  A composite margin lower than otherwise considered appropriate for the stand-alone long-term care policy may be justified for long-term care benefits provided through a life policy or an annuity contract. This lower composite margin, if utilized, shall be justified by the appropriate actuarial demonstration addressing margins and volatility when considering the entirety of the product;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">                (IV)  A greater margin may be appropriate in circumstances where the company has less credible experience to support its assumptions used to determine the premium rate;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">        (c)  An actuarial memorandum prepared, dated and signed by a member of the Academy of Actuaries shall be included and shall address and support each specific item required as part of the actuarial certification and provide at least the following information:</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">            (i)  An explanation of the review performed by the actuary prior to making the statements in subdivisions (2)(b)(ii) and (iii);</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">            (ii)  A complete description of pricing assumptions;</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">            (iii)  Sources and levels of margins incorporated into the gross premiums that are the basis for the statement in subdivision (2)(b)(i) of the actuarial certification and an explanation of the analysis and testing performed in determining the sufficiency of the margins. Deviations in margins between ages, sexes, plans or states shall be clearly described. Deviations in margins required to be described are other than those produced utilizing generally accepted actuarial methods for smoothing and interpolating gross premium sales; and</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">            (iv)  A demonstration that the gross premiums include the minimum composite margin specified in subdivision (2)(b)(vi);</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">    (3)  In any review of the actuarial certification and actuarial memorandum, the director</span><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0"> </span><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">may request review by an actuary with experience in long-term care pricing who is independent of the</span><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0"> </span><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">company. In the event the director asks for additional information as a result of any review, the period in</span><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0"> </span><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">subdivision (1) of this section does not include the period during which the insurer is preparing the</span><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0"> </span><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">requested information.</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">    </span><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0-000001">Source:</span><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0"> 28 SDR 157, effective May 19, 2002</span><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">; 44 SDR 184, effective June 25, 2018</span><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">.</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">    </span><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0-000001">General Authority:</span><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0"> SDCL </span><a href="https://sdlegislature.gov/Statutes?Statute=58-17B-4"><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0-000003">58-17B-4</span></a><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">.</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">    </span><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0-000001">Law Implemented:</span><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0"> SDCL </span><a href="https://sdlegislature.gov/Statutes?Statute=58-17B-4"><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0-000003">58-17B-4</span></a><span class="sb75be79d-6121-46ff-bc3f-41f159673c6bC0">.</span></p><p dir="ltr" class="sb75be79d-6121-46ff-bc3f-41f159673c6bP0"><span xml:space="preserve" class="sb75be79d-6121-46ff-bc3f-41f159673c6b000002"> </span></p></div></body></html>