Arthur Rudnick
Guru
- 1,652
originally posted by Mr_Ed
They teach Smileys in Law School?
They teach Smileys in Law School?
New Genworth Product Announced
- Thread starter yankee466
- Start date
All those years of law school are finally paying off!
Yes. Consiseness is the key factor to legal writing.
seems to me there are many reasons to advise a client to do it, and do it now.....its not as if we're discussing solutions for a problem that is likely to go away...
what's going on is that no entity...carriers/individuals/municipalities/states/polictians etc can figure out how to control and pay for health and care-giving expenses....Willard Scott needs additional weekly spots to congratulate those turning 100+..... and regardless of the premium you got in at, or what its gone up to....its still pennies on the dollar when you need it. Anything else is just a smoke screenstrying form the real issue. Meanwhile Alzheimers is growing exponentially, and its not exactly contagious.
what's going on is that no entity...carriers/individuals/municipalities/states/polictians etc can figure out how to control and pay for health and care-giving expenses....Willard Scott needs additional weekly spots to congratulate those turning 100+..... and regardless of the premium you got in at, or what its gone up to....its still pennies on the dollar when you need it. Anything else is just a smoke screenstrying form the real issue. Meanwhile Alzheimers is growing exponentially, and its not exactly contagious.
- 2,584
Arthur Rudnick
Guru
- 1,652
LTCI rate measure could expand actuaries' role
BY ALLISON BELL
JUNE 16, 2014 •
State regulators may require issuers of long-term care insurance (LTCI) to get more advice from actuaries when setting and changing rates. Members of the Health Insurance and Managed Care Committee at the National Association of Insurance Commissioners (NAIC) have agreed to approve a draft of proposed changes to the group's Long-Term Care Insurance Model Regulation.
California voted against adoption, officials say. Many insurers once bragged that they never raised their LTCI rates. Since 2005, however, insurers in the market have asked for a series of big increases.
The carriers -- including the nonprofit, self-funded California Public Employees' Retirement System (CALPERS) -- have blamed low earnings on investment portfolios and the discovery that holders of LTCI coverage are much more likely to keep their policies than the actuaries had originally expected.
The NAIC's existing model LTCI rate regulation already requires an insurer to certify that the initial rate schedule is enough to cover "moderately adverse experience," and that a proposed increase should eliminate the need for further increases even under moderately adverse conditions. In the new draft regulations, officials would require insurers to provide more actuarial analysis in rate filings.
When setting rates at the beginning, actuaries would have to show, for example, that they had reviewed and considered reserve requirements. A member of the American Academy of the Actuaries would have to sign a memorandum that would address and support each specific item required in the actuarial certification.
The draft regulations also include new annual rate certification requirements.
BY ALLISON BELL
JUNE 16, 2014 •
State regulators may require issuers of long-term care insurance (LTCI) to get more advice from actuaries when setting and changing rates. Members of the Health Insurance and Managed Care Committee at the National Association of Insurance Commissioners (NAIC) have agreed to approve a draft of proposed changes to the group's Long-Term Care Insurance Model Regulation.
California voted against adoption, officials say. Many insurers once bragged that they never raised their LTCI rates. Since 2005, however, insurers in the market have asked for a series of big increases.
The carriers -- including the nonprofit, self-funded California Public Employees' Retirement System (CALPERS) -- have blamed low earnings on investment portfolios and the discovery that holders of LTCI coverage are much more likely to keep their policies than the actuaries had originally expected.
The NAIC's existing model LTCI rate regulation already requires an insurer to certify that the initial rate schedule is enough to cover "moderately adverse experience," and that a proposed increase should eliminate the need for further increases even under moderately adverse conditions. In the new draft regulations, officials would require insurers to provide more actuarial analysis in rate filings.
When setting rates at the beginning, actuaries would have to show, for example, that they had reviewed and considered reserve requirements. A member of the American Academy of the Actuaries would have to sign a memorandum that would address and support each specific item required in the actuarial certification.
The draft regulations also include new annual rate certification requirements.
The NAIC's existing model LTCI rate regulation already requires an insurer to certify that the initial rate schedule is enough to cover "moderately adverse experience," and that a proposed increase should eliminate the need for further increases even under moderately adverse conditions.
"New Insurance Regulation" Protects Consumers from LTC Insurance Rate Increases
There are two different ways long-term care insurance premiums are regulated in the 50 states.
To help you understand the new regulation, it will help if I first briefly explain the old regulation.
The intent of the old regulation was to make sure that consumers did not overpay for long-term care insurance and to make sure that the insurance companies did not earn huge profits.
The intent was good, but the actual implementation of the regulations had some unintended consequences.
In most states, this regulation required the insurer to pay no less than 60 (or 65) cents in claims for every dollar that they collected in premiums. The remainder would cover the insurer's costs (administration, taxes, customer service, distribution, etc…) and still allow room for some profit.
The regulators thought this was the best way to protect consumers and prevent the insurers from overcharging.
A problem arose, however, when some insurance companies realized that they had grossly underestimated their claims. For some companies, their claims turned out to be twice as high as they had projected. The old regulation allowed the insurers to double their premiums since the claims were twice as high as they had anticipated.
By taking advantage of this "loophole", these increases not only doubled the premiums the policyholders were paying, but these higher premiums also dramatically increased the insurer's profits! Essentially, the insurers were rewarded for doing a bad job to begin with.
This new regulation was crafted with the intent of keeping LTC insurance premiums stable and is therefore called the "Rate Stability Regulation".
This new regulation requires insurers to do a better job of pricing their policies and to use more conservative projections.
This new regulation requires the insurers to price a "cushion" into their premiums so that even if their projections are not conservative enough, they still won't have to increase premiums over the life of the policy. A qualified actuary must certify that there's enough "cushion" in the pricing such that the policy won't ever need a rate increase, even if their experience is "moderately" worse than expected.
If a premium increase is required, this new regulation removes the profit incentive from the premium increase. This new regulation requires that nearly every penny of any increase go towards actual claims payments. Since there is no money to be made on a premium increase, the insurers are motivated to price their policies right the first time.
If a premium increase is required, this new regulation requires a qualified actuary to certify that the policyholders will only get that one premium increase and no other increases will be necessary over the life of the policy.
If a premium increase is approved, the insurer must re-certify that increase, every year for at least 3 years. If the projections turn out to be wrong, the insurance commissioner can require the insurer to refund all (or part) of the premium increase to the policyholders.
