Connecticut OKs 69% Penn Treaty Unit LTCI Rate Hike

Officials at the Connecticut Insurance Department are letting a state insurance company guaranty fund increase a failed long-term care insurance (LTCI) issuer's premiums an average of 69%.

The department earlier this week approved the full rate increase requested by the Connecticut Life & Health Guaranty Association for American Network Insurance Company.

American Network is an affiliate of another insolvent LTCI issuer, Penn Treaty.

American Network issued the 531 Connecticut policies affected by the rate increase, through agents, from 1998 through 2008.

A copy of the approval announcement is available here.

A copy of the original application, which was filed in May, and is 587 pages long, is available here.

Guaranty fund representatives told regulators in May that claim experience at American Network and Penn Treaty could justify a 635% rate increases.

Connecticut department officials have rejected or reduced many insurers' requests for LTCI rate increases, arguing that the insurers' actual LTCI experience in Connecticut has been better than expected.

Officials reported in the American Network increase approval announcement that American Network's experience in Connecticut has been poor.

"After an actuarial review, the department determined that the experience of this block of business in both Connecticut and nationwide has deteriorated and will continue to worsen," officials said in the announcement. "Without a rate adjustment, the [guaranty] association is expected to spend more than $1 on claims costs for every premium dollar it receives, far exceeding the 60% statutory minimum required by state law."

Officials noted that the affected policyholders will be offered three different ways to respond to the increase.

Any increase equal to or higher than 20% must be phased in over a period of three or more years, officials said.

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