Oregon Department of Consumer and Business Services, Insurance Regulation

Rule Rule 836-031-0220
Principles Governing Reserves


(1)

When an insurer determines that health insurance reserves meeting the minimum standards specified in OAR 836-031-0200 (Scope, Authority; Statutes Implemented; Application) to 836-031-0300 (Reserves for Waiver of Premium) are inadequate, increased reserves shall be held and shall be considered the minimum reserves for that insurer.

(2)

With respect to any block of contracts, or with respect to an insurer’s health insurance business as a whole, a prospective gross premium valuation is the ultimate test of reserve adequacy as of a given valuation date. Such a gross premium valuation must take into account, for all contracts in force, including those in a claims status or in a continuation of benefits status on the valuation date, the present value as of the valuation date of the following:

(a)

All expected benefits unpaid;

(b)

All expected expenses unpaid; and

(c)

All unearned or expected premiums, adjusted for future premium increases reasonably expected to be put into effect.

(3)

A gross premium valuation described in section (2) of this rule is to be performed whenever a significant doubt exists as to reserve adequacy with respect to any major block of contracts, or with respect to the insurer’s health insurance business as a whole. In the event inadequacy is found to exist, immediate loss recognition shall be made and the reserves restored to adequacy. Adequate reserves (inclusive of claim, premium and contract reserves, if any) by this standard shall be held with respect to all contracts, regardless of whether contract reserves are required for such contracts under OAR 836-031-0200 (Scope, Authority; Statutes Implemented; Application) to 836-031-0300 (Reserves for Waiver of Premium).

(4)

Whenever minimum reserves as defined in OAR 836-031-0200 (Scope, Authority; Statutes Implemented; Application) to 836-031-0300 (Reserves for Waiver of Premium) exceed reserve requirements as determined by a prospective gross premium valuation, such minimum reserves remain the minimum requirement under OAR 836-031-0200 (Scope, Authority; Statutes Implemented; Application) to 836-031-0300 (Reserves for Waiver of Premium).

(5)

Adequacy of an insurer’s health insurance reserves is determined on the basis of all three categories of reserves, including claim reserves, premium reserves and contract reserves, combined.
Source

Last accessed
Jun. 8, 2021