NAIC approves LTCI bulletin model

The National Association of Insurance Commissioners (NAIC) has approved a model bulletin aimed at insurers that write long-term care insurance (LTCI).

The NAIC's executive committee and its plenary — a body that includes all voting NAIC members — approved the model bulletin today at a meeting in Washington.

Regulators in individual states and other member jurisdictions, such as territories, can decide for themselves whether to use the model.

The model, which was included in a meeting materials packet, was developed by the NAIC's Senior Issues Task Force.

The task force is part of the NAIC's Health Insurance and Managed Care Committee.

Regulators that use the model as approved would send it to all licensed insurers writing LTCI policies.

The bulletin would set alternative filing requirements for LTCI premium rate increases.

The drafters of the bulletin note that the NAIC tried to improve LTCI rate stability with a model regulation adopted in 2000. The model would classify policies as "pre-rate-stability forms" and "post-rate-stability forms."

A regulator would ask an LTCI carrier for an independent actuarial analysis of a proposed rate increase. The regulator and the insurer would try to consider whether policyholders would be better off if the insurer imposed a single rate increase, then agreed not to implement additional increases for at least three years, or if policyholders would be better off if the insurer phased the increase in over a three-year period.

The bulletin says post-rate-stability policies already must provide some benefits — contingent benefits — if an LTCI policy lapses.

The bulletin calls for an LTCI carrier to provide contingent benefits for pre-rate-stability policies if the policies lapse because the carrier has imposed a large rate increase.

In some cases, the bulletin says, a regulator might require an insurer to provide a contingent benefit for any policy that lapses if the policy has reached its "twentieth duration."

Elizabeth Festa contributed information to this report.

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