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31 Pa. Code § 84a.2. Applicability and scope.

§ 84a.2. Applicability and scope.

 (a)  This chapter shall take effect for annual statements for the year 1993.

 (b)  The minimum reserve standards of this chapter apply to individual and group health and accident insurance coverages, including single premium credit health and accident insurance, issued prior to January 1, 2017, by life insurance companies, property insurance companies, casualty insurance companies and fraternal benefit societies. Monthly premium credit health and accident insurance is not subject to this chapter, but instead is subject to the reserve standards in Chapter 73 (relating to credit life and credit accident and health insurance).

 (c)  When an insurer determines that adequacy of its health and accident insurance reserves requires reserves in excess of the minimum standards specified in this chapter, the increased reserves shall be held and shall be considered the minimum reserves for that insurer.

 (d)  With respect to a block of contracts, or with respect to an insurer’s health and accident business as a whole, a prospective gross premium valuation is the ultimate test of reserve adequacy as of a given valuation date. The gross premium valuation will take into account, for contracts in force, in a claims status, or in a continuation of benefits status on the valuation date, the present value as of the valuation date of expected benefits unpaid, expected expenses unpaid and unearned or expected premiums, adjusted for future premium increases reasonably expected to be put into effect.

 (e)  The gross premium valuation is to be performed whenever a significant doubt exists as to reserve adequacy with respect to a major block of contracts, or with respect to the insurer’s health and accident business as a whole. If 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, shall be held with respect to all contracts, regardless of whether contract reserves are required for the contracts under this chapter.

 (f)  Whenever minimum reserves, as defined in this chapter, exceed reserve requirements as determined by a prospective gross premium valuation, the minimum reserves remain the minimum requirement under this chapter.

 (g)  Minimum standards for three categories of health and accident insurance reserves are established. These categories are claim reserves, premium reserves and contract reserves.

 (h)  Adequacy of an insurer’s health and accident insurance reserves is to be determined on the basis of the three categories of subsection (g) combined. These minimum standards emphasize the importance of determining appropriate reserves for each of the three categories separately.


   The provisions of this §  84a.2 amended under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P.S. § §  66, 186, 411 and 412); and 40 Pa.C.S. §  7124(c)(1) and (2).


   The provisions of this §  84a.2 amended July 14, 2006, effective January 1, 2007, 36 Pa.B. 3367; amended October 22, 2021, effective October 23, 2021, 51 Pa.B. 6600. Immediately preceding text appears at serial page (337122).

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