Regulators and legislators continue to monitor current regulations and put stronger ones in place to safeguard long-term care policyholders, interviews indicate.
Even as the National Conference of Insurance Legislators, in Albany, N.Y., plans to broach the topic at its annual meeting in Scottsdale, Ariz., next month, regulators continue work on a manual that would offer guidance for following a long-term care model regulation currently being brought to state legislators.
That model, the Long-term Care Insurance model regulation, was adopted in August 2000 after regulators and consumer advocates raised concern over spiraling rate increases being put into effect by some long-term care carriers because initial rates were underestimated. In some cases, the low rates were a bid to gain market share.
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The new regulation changed the way reasonable premiums are determined. Instead of an initial minimum fixed loss ratio, the model allowed an actuary to certify a reasonable rate. But requirements for future rate increases are changed. An insurer must show that lifetime claims will equal 58% of the initial premiums plus 85% of all increased portions of the premiums.
Lynn Boyd, legislative director-long-term care with the American Council of Life Insurers in Washington says the model regulation, which the ACLI supports, has been enacted in five states and about six more are working on regulations. A total of 20-25 states are expected to enact the model regulation either this year or next year, Boyd says.
Some states have indicated that for various reasons they will not be working on the model next year, she adds. Those include Alabama, Colorado, Connecticut, Indiana, Iowa, Massachusetts, Nebraska, New York and North Dakota.
Legislatures are considering laws to oversee the sale of long-term care insurance at a time when sales are starting to take off.
The 2000 ACLI Life Insurers Fact Book says there was an 8% increase in long-term care insurance premium and an 11.1% increase in the number of policies in 1999 compared with 1998. In 1999 premiums from sales totaled $805 million and policies totaled 496,944 compared with 1998′s $745 million and 447,294 totals.
LIMRA International in Hartford, Conn., found earlier this year that the number of Americans covered by employer-sponsored long-term care plans increased by 19% in 2000.