“New Insurance Regulation” Protects Consumers from LTC Insurance Rate Increases

[scagnt83]

The personal worksheets I have seen do not match up with no rate increases on policies issued since these "rate stability regulations" have gone into effect.

It show rate increase on policy series that span years before and after they took effect.

That is a timing issue from what I can tell from my research so far.

When new regs go into effect, the carriers cant just suddenly issue new policy lines. So every state with the new regs has blocks of business from every carrier that are regulated under 2 different laws.

The state DOIs give guidance for carriers to follow for these blocks of business.
There are multiple options (4 or 5) but most just choose to include the policies issued after the new regs in with the old policies.
But when they choose to do this they must ensure that the rate increase under the old regs will satisfy the requirements for rate stability under the new regs if I remember correctly.

 

[CALTCAgent]

The state DOIs give guidance for carriers to follow for these blocks of business.
There are multiple options (4 or 5) but most just choose to include the policies issued after the new regs in with the old policies.
But when they choose to do this they must ensure that the rate increase under the old regs will satisfy the requirements for rate stability under the new regs if I remember correctly.

I wonder if this accounts for the statement that there have been almost no rate increases under the new "rate stability regs".

I am still finding it hard to verify this.

I guess finding the right person at a carrier would help to verify this. The sales departments haven't been much help.

 

[scagnt83]

I wonder if this accounts for the statement that there have been almost no rate increases under the new "rate stability regs".

I am still finding it hard to verify this.

I guess finding the right person at a carrier would help to verify this. The sales departments haven't been much help.

I dont think that anyone you have access to at the carriers will know jack about any of this.

As Ed stated before, you need to research it on a state by state basis.

 

[CALTCAgent]

As Ed stated before, you need to research it on a state by state basis.

I go by what is on the personal worksheets and that the DOI has posted. That is what consumers see.

 

[scagnt83]

I go by what is on the personal worksheets and that the DOI has posted. That is what consumers see.

But as Ed mentioned that is not the whole story.

As the agent it is your job to dig beneath the surface so that you can fully educate the client on the true reality of what they "see".


Take SC for example. We just had a rate increase on a policy line from 2008-2012.

But the new regs kicked in July 2010.

The reason the 2011/2012 policies were increased was because they were policy lines approved before the new Regs. So special circumstances apply to those policies under the new Regs since their premiums were calculated using the guidelines of the old Regs.

You explain that to a client by saying "Some policies during the change over to the new regs were a victim of bad timing unfortunately. And even though the new regs were in place, the way they figured the premium was still based on the old regs, so they were lumped in with the old policies. An insurer cant change the premium calculation without filing a new policy line with the state and waiting for that to be approved. Now all of the policies issued have premiums calculated under the new Regs. so hopefully there should not be the same degree of increases we have seen in the past."

 

[Mr_Ed]

But as Ed mentioned that is not the whole story.

As the agent it is your job to dig beneath the surface so that you can fully educate the client on the true reality of what they "see".


Take SC for example. We just had a rate increase on a policy line from 2008-2012.

But the new regs kicked in July 2010.

The reason the 2011/2012 policies were increased was because they were policy lines approved before the new Regs. So special circumstances apply to those policies under the new Regs since their premiums were calculated using the guidelines of the old Regs.

You explain that to a client by saying "Some policies during the change over to the new regs were a victim of bad timing unfortunately. And even though the new regs were in place, the way they figured the premium was still based on the old regs, so they were lumped in with the old policies. An insurer cant change the premium calculation without filing a new policy line with the state and waiting for that to be approved. Now all of the policies issued have premiums calculated under the new Regs. so hopefully there should not be the same degree of increases we have seen in the past."

at least somebody gets it.

 

[Arthur Rudnick]

Massachusetts Drafts LTCI Rate Regs
BY ALLISON BELL
JULY 10, 2014 •

Insurance regulators in Massachusetts want to require insurers to give more information before they increase long-term care insurance (LTCI) prices but have not put a cap on increases. Officials at the state's Division of Insurance have released draft LTCI regulations and explained their proposal in a new LTCI report.

Officials say they considered a proposal to limit LTCI increases to no more than 10 percent per year

The division rejected that proposal, because it feared some consumers that had to spread increases over several years would end up seeking bigger increases than they would have sought if they could have implemented one big increase. The division also rejected a proposal to require all new LTCI policies to offer at least one policy with the premiums guaranteed throughout the policy's lifetime, and to create a guaranty fund that would support the development of a guaranteed-price product.

"Carriers have been permitted to offer non-cancellable policies, yet have not offered them due to uncertainty in pricing future costs," officials write. "If required, the premiums for these products would be substantially more expensive than products currently being offered in the market."

Officials did decide to make all rate changes based on investment losses "presumptively disapproved." "This would prohibit carriers from raising premiums to make up for lower than anticipated investment returns," officials say.

In the proposed regulations, officials also moved to:

*Include rate stabilization provisions from a model regulation developed by the National Association of Insurance Commissioners (NAIC).

*Require all LTCI rate filings to include projections of future LTCI claims experience based on moderately adverse assumptions.

*Prohibit a carrier from charging more for policies in a "closed block" than it would charge for similar coverage offered to new enrollees.

*Require that at least 85 percent of any premium increase on an existing block of business be used to pay the block's claims.

*Require an insurer to put an analysis of actual LTCI claims experience in the estimates of overall rate need.

 

[Mr_Ed]

Massachusetts Drafts LTCI Rate Regs
BY ALLISON BELL
JULY 10, 2014 •

Insurance regulators in Massachusetts want to require insurers to give more information before they increase long-term care insurance (LTCI) prices but have not put a cap on increases. Officials at the state's Division of Insurance have released draft LTCI regulations and explained their proposal in a new LTCI report.

Officials say they considered a proposal to limit LTCI increases to no more than 10 percent per year

The division rejected that proposal, because it feared some consumers that had to spread increases over several years would end up seeking bigger increases than they would have sought if they could have implemented one big increase. The division also rejected a proposal to require all new LTCI policies to offer at least one policy with the premiums guaranteed throughout the policy's lifetime, and to create a guaranty fund that would support the development of a guaranteed-price product.

"Carriers have been permitted to offer non-cancellable policies, yet have not offered them due to uncertainty in pricing future costs," officials write. "If required, the premiums for these products would be substantially more expensive than products currently being offered in the market."

Officials did decide to make all rate changes based on investment losses "presumptively disapproved." "This would prohibit carriers from raising premiums to make up for lower than anticipated investment returns," officials say.

In the proposed regulations, officials also moved to:

*Include rate stabilization provisions from a model regulation developed by the National Association of Insurance Commissioners (NAIC).

*Require all LTCI rate filings to include projections of future LTCI claims experience based on moderately adverse assumptions.

*Prohibit a carrier from charging more for policies in a "closed block" than it would charge for similar coverage offered to new enrollees.

*Require that at least 85 percent of any premium increase on an existing block of business be used to pay the block's claims.

*Require an insurer to put an analysis of actual LTCI claims experience in the estimates of overall rate need.

What's really sad is that nearly 40 states have had these regulations in effect for over 5 years. Many states have had these regulations in effect for over 10 years. Yet, this makes news?

The news article should be about all the states that have already had these regulations in effect for years, not that Massachusetts is finally thinking about passing a model regulation that was drafted 14 years ago!

gimmeabreak.

massachusetts should be ashamed of itself for finally taking up a model regulation that's 14 years old.

And Alison Bell should do a little more research.