<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.sb8b73812-7fd5-435a-9a19-319b36d11236Normal { 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.sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont-000000 { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.sb8b73812-7fd5-435a-9a19-319b36d11236000001 { font-size: 12pt; font-style: normal; font-weight: normal; margin: 0; padding: 0; } span.sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont-000002 { color: #0000FF; 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="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">    </span><span class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont-000000">20:06:21:66.  Premium rate schedule increases -- Adverse lapsation.</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236000001"> </span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">    (1)  For a rate increase filing that meets the following criteria, the director shall review, for all policies included in the filing, the projected lapse rates and past lapse rates during the 12 months following each increase to determine if significant adverse lapsation has occurred or is anticipated:</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236000001"> </span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">        (a)  The rate increase is not the first rate increase requested for the specific policy form or forms;</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">        (b)  The rate increase is not an exceptional increase; and</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">        (c)  The majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse;</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236000001"> </span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">    (2)  In the event significant adverse lapsation has occurred, is anticipated in the filing, or is evidenced in the actual results as presented in the updated projections provided by the insurer following the requested rate increase, the director may determine that a rate spiral exists. Following the determination that a rate spiral exists, the director may require the insurer to offer, without underwriting, to all in force insureds subject to the rate increase the option to replace existing coverage with one or more reasonably comparable products being offered by the insurer or its affiliates:</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236000001"> </span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">        (a)  The offer shall:</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236000001"> </span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">            (i)   Be subject to the approval of the director;</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">            (ii)  Be based on actuarially sound principles, but not be based on attained age; and</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">            (iii) Provide that maximum benefits under any new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy;</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236000001"> </span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">        (b)  The insurer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase shall be limited to the lesser of:</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236000001"> </span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">            (i)   The maximum rate increase determined based on the combined experience; and</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">            (ii)  The maximum rate increase determined based only on the experience of the insureds originally issued the form plus ten percent;</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236000001"> </span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">    (3)  If the director determines that the insurer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, the director may, in addition to the provisions of subdivisions (1) and (2) of this section, prohibit the insurer from either of the following:</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236000001"> </span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">        (a)  Filing and marketing comparable coverage for a period of up to five years; or</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">        (b)  Offering all other similar coverages and limiting marketing of new applications to the products subject to recent premium rate schedule increases.</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236000001"> </span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">    </span><span class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont-000000">Source:</span><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont"> 28 SDR 157, effective </span><span class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">May 19, 2002.</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">    </span><span class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont-000000">General Authority:</span><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont"> SDCL </span><a href="https://sdlegislature.gov/Statutes?Statute=58-17B-4"><span class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont-000002">58-17B-4</span></a><span class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">.</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">    </span><span class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont-000000">Law Implemented:</span><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont"> SDCL </span><a href="https://sdlegislature.gov/Statutes?Statute=58-17B-4"><span class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont-000002">58-17B-4</span></a><span class="sb8b73812-7fd5-435a-9a19-319b36d11236DefaultParagraphFont">.</span></p><p dir="ltr" class="sb8b73812-7fd5-435a-9a19-319b36d11236Normal"><span xml:space="preserve" class="sb8b73812-7fd5-435a-9a19-319b36d11236000001"> </span></p></div></body></html>