MedAmerica has asked Connecticut insurance regulators for permission to increase rates on 124 policies in force in the state an of 37 percent.
MedAmerica, a unit of Excellus, sold the policies in Connecticut from 2004 through 2007 and is no longer marketing plans of that kind in that state.
MedAmerica needs to raise rates on renewals because policyholders have done a better job of keeping the policies than MedAmerica had expected and low interest rates have cut returns on the investments helping to support the business, the company said.
The proposed increase would affect a total of about 19,523 policyholders throughout the country, MedAmerica said.
Like other companies that have proposed similar increases in recent years, the company has said it will mitigate the effects of the increase by giving policyholders the option of reducing benefits rather than paying higher premiums, the company said.
Although the average increase would be 37 percent, "the rate increase was determined by issue age to better align the rate increase with the adverse experience and to protect older insureds," the company said in its application. "The rate increase varies from 0 percent to 60 percent."
The affected policies generate $312,765 in premiums per year in Connecticut and about $35 million in annualized premium revenue nationwide, according to the filing.
About 43 percent of the policyholders have been paying for coverage annually, 6 percent on a semi-annual basis, 18 percent on a quarterly basis and 32 percent on a monthly basis.
Tricia Mooneyhan, a MedAmerica representative, said in an e-mail interview that the company believes the effects of low interest rates are outweighing the effects of high persistency on LTCI block performance.
"The impact of interest rates on reserves can quickly compound, and we believe it is most prudent to address this issue now by filing the necessary rate increases and ensure that we continue to keep our promises and meet our obligations to all of our insureds," Mooneyhan said.
"MedAmerica continues to be dedicated to selling long term care insurance, and we are 100% committed to cash LTCi as a viable consumer choice in the marketplace," Mooneyhan said. "We continue to offer a complete portfolio of chronic care insurance products."
The company sells a 100 percent cash LTCI product, a reimbursement policy with a 100 percent cash rider, a short-term recovery care policy, and New York and Connecticut market LTCI partnership program products.
"MedAmerica continues to focus on growing its market share and offering innovative products to provide chronic care financing solutions at nearly any price point, for nearly any client," Mooneyhan said.
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