Mass. Regulators Study LTC Insurance

Beyond that law, DOI officials hope facts uncovered by the study would make it easier to convince the legislature that it needs need new regulatory powers. Regulators hope the study would "demonstrate the evolution of the market and show why regulations might not be as sufficient as they should be," Beagan says.

"We in Massachusetts review long term care rates the same way we review medical insurance rates," he adds. "But it's a different product. Unlike with medical insurance, long term care insurance collects a good deal of premium before it ever pays any benefits."

Among continuing concerns to the DOI is that many agents selling LTC in the state lack training, Beagan declares.

"We don't have any ability to require agents to get prior training in long term care insurance, and for that reason we are looking to get carriers to beef up marketing and training programs," he says

[Although the current model law does not impose detailed training requirements on LTC producers, an NAIC working group is considering amendments to the model that would add requirements for agent education, including eight hours of training every 24 months.]

Beagan notes adoption of the model act would also give more power to the DOI to regulate rates.

Among other powers, the proposed law would enable the DOI to assure LTC insurance premiums provide adequate profit margins to carriers, to forestall potential rate increases.

It also would require carriers to reimburse policyholders for rate increases the DOI later deemed to be unnecessary. In addition, it would authorize the state insurance commissioner to review and approve a carrier's administration and claim practices.

Adoption of the model act would also impose a requirement to protect policyholders if their carrier imposed a significant premium rate increase they could not afford, Beagan notes. The requirement, known as the contingent benefit, would offer policyholders who could no longer afford a policy an alternative, such as a lower cost policy with reduced benefit payouts.

A pending bill would also give the DOI authority to cover plans sold through employers, unions and associations