New Genworth Product Announced

[Arthur Rudnick]

Actually Scott, I do understand what you're saying.
And, the only way to prove if what you're saying is true, is we'll have to revisit this conversation down the road.

If there are no rate increases going foward on newly issued policies in those 42 states then you've made your point. If policies issued after 2012 carry future increases then it will prove that the latest regulations are no better or different than the previous ones.

Do you know if SC has signed on? Because according to scagnt83, Genworth is raising rates on policies written in 2012.

If SC is a signee to the Rate Stability Regulations, how do you explain the increase?

And again, is there a way to find out what states have signed on and what states haven't?

 

[Mr_Ed]

Actually Scott, I do understand what you're saying.
And, the only way to prove if what you're saying is true, is we'll have to revisit this conversation down the road.

If there are no rate increases going foward on newly issued policies in those 42 states then you've made your point. If policies issued after 2012 carry future increases then it will prove that the latest regulations are no better or different than the previous ones.

You obviously don't get it, Arthur.
These regulations did NOT go into effect in 2012.

For some states these regulations have been in effect FOR OVER 10 YEARS!!!!!!


We know that these regulations work because they've been working for over 10 years!






x

 

[scagnt83]

Originally posted by scagnt83

According to Mr_Ed, there's no way that can be unless SC was one of the 8 states that didn't sign on to sets of regulations from 2001, 2002, 2003, 2008, 2009, 2010, or 2011.

SC signed the new regs into law in 2010. They became effective in 2011.

 

[Mr_Ed]

SC signed the new regs into law in 2010. They became effective in 2011.

Not sure of the answer.
One actuary told me this morning that as of March, 2012, the Rate Stabilization Regs were NOT in effect in South Carolina. Maybe the regulation was delayed for some reason.

It seems that this rate increase you're referring to is a policy series that had policies issued before and after Rate Stabilization.

The document that Jack shared yesterday addresses that on page 25:


What considerations may arise when an in-force premium rate
increase is sought on a block that has both policies issued
under the loss ratio regulation and those issued under the rate
stability regulation?

Some LTC blocks crossed over the effective date of the model regulation, and therefore have policies issued under both the loss ratio regulation (Section 19) and the rate stability regulation (Sections 10 and 20). If a premium rate increase is sought, the actuary, together with the company management, may consider the following options:

• Subject all policies to the loss ratio regulation;
• Bifurcate the block between loss ratio and rate stability regulation by issue date;
• Apply the loss ratio regulation and the rate stability regulation to the entire block; or
• Apply only the rate stability regulation to the block.



Since the rate incrase you're referring to is identical for all the policies (both before Rate Stability and after Rate Stability) then it looks like GNW took either the first approach or the last approach. (probably the last).


To get a better idea of how well Rate Stability works we need to look at states which have had it in place for a long time, like 10 years or more.

 

[scagnt83]

Not sure of the answer.
One actuary told me this morning that as of March, 2012, the Rate Stabilization Regs were NOT in effect in South Carolina. Maybe the regulation was delayed for some reason.

It seems that this rate increase you're referring to is a policy series that had policies issued before and after Rate Stabilization.

The document that Jack shared yesterday addresses that on page 25:


What considerations may arise when an in-force premium rate
increase is sought on a block that has both policies issued
under the loss ratio regulation and those issued under the rate
stability regulation?

Some LTC blocks crossed over the effective date of the model regulation, and therefore have policies issued under both the loss ratio regulation (Section 19) and the rate stability regulation (Sections 10 and 20). If a premium rate increase is sought, the actuary, together with the company management, may consider the following options:

• Subject all policies to the loss ratio regulation;
• Bifurcate the block between loss ratio and rate stability regulation by issue date;
• Apply the loss ratio regulation and the rate stability regulation to the entire block; or
• Apply only the rate stability regulation to the block.



Since the rate incrase you're referring to is identical for all the policies (both before Rate Stability and after Rate Stability) then it looks like GNW took either the first approach or the last approach. (probably the last).


To get a better idea of how well Rate Stability works we need to look at states which have had it in place for a long time, like 10 years or more.

I wish I knew the answer to the 2010 or 2012 in SC (guess I should know). It very well could have been delayed like you said.

But your explanation of what happened to that block makes perfect sense. I guess by not "bifurcating" the block, they reasoned that it was better to go ahead and get the rate increase over with sooner rather than later.

 

[Mr_Ed]

Read through the "laws" and really how is that different than any other insurance regulations out there? Of course carriers have to prove by formula that a rate increase is necessary, that's really not different than before. They have to show their pricing model. How is that different than before?

I found no real cap on anything. I just found the requirements to be met to file for a rate increase. There doesn't appear to be an "ah ha" moment where we've got them by the short hairs. It is just the requirements to be demonstrated to have a rate increase approved.

The old rules were called "Loss Ratio Regulation". Those rules required the insurers to base their premiums on their projected claims. They had to price in no less than 60 cents of claims payments for every dollar in premiums. If claims were higher than projected they could request a premium increase. It was very simple and cut and dry. To get a rate increase all a carrier had to do was show that their claims were more than 60% of their premiums.

The Rate Stability Regulations are completely different and much stricter.

You might want to read the regulation again.

All I know is this: the Connecticut insurance commissioner will define moderately adverse experience more stringently than the Pennsylvania insurance commissioner.

Not true, Jack.

Moderately Adverse Experience is defined by the actuary when he/she certifies that the policy series is priced with enough cushion to never need a premium increase over the life of the policy (e.g. 50 years) even under Moderately Adverse Experience.

When the DOI approves the policy for sale, the DOI is also approving the definition of Moderately Adverse Experience.




Message from Arthur to me. I'm posting it because it seems that a lot of agents misunderstand the Rate Stability Regulations, like Arthur does.

My comments are in in bold and italics.



Originally Posted by Mr_Ed
You obviously don't get it, Arthur.
These regulations did NOT go into effect in 2012.

For some states these regulations have been in effect FOR OVER 10 YEARS!!!!!!

We know that these regulations work because they've been working for over 10 years!




Scott,
I don't want to beat a dead horse, but I'm a little confused by your statements.

You say:
"We know that these regulations work because they've been working for over 10 years!" What exactly has been working? The Model Act was first passed back in 2001. States started to come onboard since then and today, 42 states have signed on.

Correct me if I'm wrong, but the purpose of the Model Act and all subsequent rules and regs can be summed up in 2 points:
1) To stabilize LTCi rates and try to avoid future rate increases, and
2) To develop uniform standards for LTC insurance products

What I don't undersatnd is if a number of states have adopted these rules & regs since 2002, how come the industry is still experiencing exhorbitant rate increases? Isn't this contrary to your statement about these regulations working because they've been working for over 10 years?


Nearly all of the exorbitant rate increases, Arthur, are on policies that were issued BEFORE the Rate Stability Regulations took effect in that particular state.



GNW & Hancock (to name only 2 carriers) have implemented increases nationwide over the past few years. How can it be nationwide if during the time of states signing on, multiple increases are common occurrances? If states A, B & C signed on to the Model Act in 2005, (as an example) why wouldn't all rate increases post 2005 be limited?


First of all, there's no such thing as a "nationwide" rate increase. Rate increases are done state-by-state. Secondly, please re-read what I posted above. "Nearly all of the exorbitant rate increases, Arthur, are on policies that were issued BEFORE the Rate Stability Regulations took effect in that particular state."




Or is there something different in the 2012 rules & regs that didn't exist prior to then?


There ARE NO 2012 Rules and Regs. The document you read that was published in 2012 was just written to actuaries to help them abide by the Rate Stablity Regulations which have been approved in 42 states in the past 13 years.



And, in spite of the rules & regs of 2012,

Once again, Arthur, there were no new rules that came out in 2012 regarding Rate Stability. The Rate Stability Regulations were approved by the NAIC in 2000, approved by the first state in 2001 and approved by 42 states in all over the past 13 years.



Tom McInerney, Genworth's CEO has recently, stated that he was for small rate increases on existing policyholders every year or so, rather than large ones every 5, 10 or 15 years.


The Rate Stability Regulations, Arthur, do not allow for multiple rate increases. The Rate Stability Regulations allow for ONE rate increase under very strict conditions.

Tom McInerney is NOT talking about having annual rate increases on the policies that we sell today.

Tom McInerney is trying to get the regulators to approve a new type of long-term care insurance which is priced more like Medicare Supplements and allows for annual changes in the premiums based upon experience.





Here was the question posed to him and his answer:

Question: Is it fair to say that without the ability to adjust premiums every year or two you would exit the business?
McInerney: Yes. You cannot predict these risks over a long period of time. If you are not able to make these modest corrections, these risks can become unmanageable. If you spread them out, do it frequently enough, and keep the increases to 2-3-4-5 percent, it is manageable.

Doesn't his answer negate the purpose of the Model Act?


His answer does not negate the Rate Stability Regulations.
He's trying to get the regulators to approve a new type of LTCi policy that allows for annual premium increases based upon experience.

The Rate Stability Regulations do NOT allow for multiple premium increases.



As I stated in one of my earlier posts, if states disallow rate increases, carriers will no long sell product in those states.


That is absurd. States have little control of allowing or not allowing a rate increase on policies that were issued under the "Loss Ratio Regulation". The regulation allows rate increaes if the carrier's loss ratio is over 60%.

The reason new business premiums are so much higher than policies we sold several years ago is because the actuaries and the carriers know that any policy purchased today (that is purchased in a state that has adopted the Rate Stability Regulations) has an extremely low probability of a rate increase.



So, my point is (and has been)if the Model Act and all subsequent rules & regs have not limited the frequency & amount of rate increases over the past 12 years, why do you think things will be different going forward.



Arthur, how many times do I have to say it. Nearly all of the rate increases your complaining about are rate increases that were on policies that were issued under the Loss Ratio Regulations.

Nearly all of the exorbitant rate increases that you are upset about, are on policies that were issued BEFORE the Rate Stability Regulations took effect in that particular state.





On a personal note, it's been a long time since you & I have been in a pissing contest. Long overdue.

Happy Father's Day.
Arthur


It's not a pissing contest, Arthur. It's just that you don't understand the facts of the matter nor do you understand the regulations.



mrsed
mred
sao

 

[ltcadviser]

Not true, Jack.

I was just making a joke, Scott

 

[CALTCAgent]

Can someone summarize this discussion on the regulations for me ?

I know it is fairly simple to others.

 

[ltcadviser]

Can someone summarize this discussion on the regulations for me ?

I know it is fairly simple to others.

Loss Ratio Regulations :(
Rate Stability Regulations

 

[Mr_Ed]

Loss Ratio Regulations :(
Rate Stability Regulations

All those years of law school are finally paying off!