Phase I produced a manual for the financial regulation of long term care insurance, covering such subjects as the crucial policy provisions, problems in insuring clauses, nonforfeiture provisions, underwriting practices, valid methods to monitor cumulative loss ratios, circumstances in which premium rate increases should be approved, methods to compute reserve and solvency standards, and tables that may be used as the basis of valuation standards. In Phase II, two advanced actuarial computer models will be developed that can be used by state insurance regulators to carry out their responsibilities to assure value to consumers and financial soundness of the insurers. The first model, the ARC LTC Insurance Financial Regulation Model, will provide the basis for assessing whether the benefits contained in a LTC policy are reasonable compared to the premium rate, monitoring ongoing loss ratios, reviewing rate increases, computing reserve standards and mandatory nonforfeiture benefit tables. The second model, the ARC LTC Insurance Solvency Standards Model, will provide the basis for setting solvency standards for insurers and to assess the level of capital that is needed to cover the potential losses from adverse experience. These models will be marketed to state insurance departments, consumer groups, and insurance companies.
