Oregon Department of Consumer and Business Services, Insurance Regulation
The following provisions apply to claim reserves generally:
An insurer must maintain claim reserves for all incurred but unpaid claims on all health insurance policies;
An insurer must maintain appropriate claim expense reserves with respect to the estimated expense of settlement of all incurred but unpaid claims; and
An insurer must test all such reserves for prior valuation years for adequacy and reasonableness using claim runoff schedules in accordance with the statutory financial statement, including consideration of any residual unpaid liability.
The following minimum standards apply to claim reserves for disability income insurance:
For claims with a duration from date of disablement of less than two years, reserves may be based on the experience of the insurer, if such experience is considered credible, or upon other assumptions that to place a sound value on the liabilities; and
For group disability income claims with a duration from date of disablement of more than two years but less than five years, reserves may, with the approval of the Director, be based on the experience of the insurer. The request for such approval of a plan of modification to the reserve basis must include:
An analysis of the credibility of the experience;
A description of how the experience of the insurer is proposed to be used in setting reserves;
A description and quantification of the margins to be included;
A summary of the financial impact that the proposed plan of modification would have had on the last filed annual statement of the insurer;
A copy of the approval of the proposed plan of modification by the commissioner of the state of domicile; and
Any other information requested by the Director; and
Duration of disablement. For contracts with an elimination period, the duration of disablement must be measured as dating from the time that benefits would have begun to accrue had there been no elimination period.
The following minimum standards apply to claim reserves for all other benefits:
Morbidity or other contingency. The reserve must be based on the experience of the insurer, if such experience is considered credible, or upon other assumptions that place a sound value on the liabilities.
Any generally accepted or reasonable actuarial method or combination of methods may be used to estimate all claim liabilities. The methods used for estimating liabilities generally may be aggregate methods, or various reserve items may be separately valued. Approximations based on groupings and averages may also be employed. Adequacy of the claim reserves, however, shall be determined in the aggregate.