State insurance regulators are designing a program that could help oversee rate increase requests for big blocks of long-term care insurance (LTCI) business.
The Long-Term Care Insurance Multistate Rate Review Subgroup — an arm of the National Association of Insurance Commissioners — has posted a draft framework for creating a Multi-State Actuarial LTCI Rate Review Team.
The officials who developed the draft have suggested that it could apply to rate increase proposals that might affect at least 5,000 LTCI policyholders in at least 20 states.
The new draft is a revision of a draft posted this past spring.
The multistate rate review team would prepare advisory reports that states could use to consider rate increase requests. States could still make their own decisions, but subgroup members are hoping the multistate approach would reduce the amount of time and money insurers have to devote to managing national rate increase requests.
LTCI Rate Review Background
Creating a multistate LTCI rate review process is of keen interest to regulators because insurers have requested and implemented hundreds of LTCI rate increase requests in the past decade. And some smaller insurers that focused mainly or exclusively on the LTCI market, including Penn Treaty and Senior Health Insurance Co. of Pennsylvania, have entered rehabilitation.
U.S. insurers wrote billions of dollars' worth of LTCI coverage from the late 1960s to the early 2010s. Most issuers assumed that earnings on investments in bonds would be much higher than they've been, and that policyholders would be much more likely to drop the coverage than they were.
Issuers have responded to worries about weak reserves by asking regulators for many increases over 50%, or even over 100%.
In one rate increase filing, actuaries suggested that a company's claims experience could justify a request for a 1,331% rate increase.
Policyholders say they were told over and over that issuers would try to hold LTCI premiums steady. They also argue that the issuers should bear the brunt of inaccurate assumptions whenever possible because the issuers were in a much better position to make assumptions and deal with inaccurate assumptions than the policyholders.
