Iowa Commissioner Reports To Governor On LTC

Standardize policy terminology and definitions.

Require LTC carriers to provide clear policy summaries to policyholders.

Review all marketing materials on LTC products before use by carriers and agents.

Work with other state agencies to educate consumers about insurance and long term care.

Establish education requirements for insurance agents who sell LTC insurance in the state. (The division already adopted this mandate Sept. 7.)

Review and approve marketing materials on long term care used by insurers and agents.

Create a unit to handle all types of consumer insurance complaints.

One frequent critic of Voss's division had mild praise for the report.

"It appears a number of things in the report are on track," says Donald J. Doudna, president of the Family Business Resource Center in West Des Moines. Recommendations on improving suitability, claims processing and training of agents were particularly laudable, he says.

"It took a long time for the commissioner to listen to the consumer," states Doudna, who says he has had an LTC policy for 15 years. "Some companies and agents in Iowa should lose their licenses. The commissioner needs the courage to move forward. Companies forget they are in the business of paying claims. Any that don't shouldn't be licensed any longer."

John Greene, legislative director of Federal and regulatory affairs for the National Association of Health Underwriters, Arlington, Va., thinks the report's recommendations range from laudatory to unnecessary.

The big concern for Greene was Voss's proposal that the insurance division review all marketing materials used by carriers and agents. The fact that agents' materials would be included could be a "nightmare" for them, Greene warns.

"A lot of agents create marketing materials to show consumers the differences between products," he says. "This is a benefit to consumers." Having to run such brochures through the state for approval "is going to create chaos," he cautions.

Greene also scorned the idea of holding consumer-initiated rate hearings. "I can't imagine any consumer saying, 'Yes, please raise my rates,' " he says.

Another industry expert, Jesse Slome, called the report "a balanced look" that helps counter critical articles about the industry that have appeared in the press in the past year.

Some of the report's criticism of industry practices with policy pricing and lapse rates was not accurate, however, argues Slome, executive director of the American Association for Long-Term Care Insurance, Westlake Village, Calif.

"The report includes a regrettable reference to the industry having 'done a poor job of making assumptions in regard to pricing long term care insurance,' " he says.

Much of that problem stemmed from carriers having underestimated the costs and length of time claimants would need care, Slome says. In addition, they overestimated policy lapse rates. "So the good news, not included in the conclusions, is that insurers paid more in benefits for people with policies," Slome says. "These Iowans clearly benefited more than the insurance companies anticipated."