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Life Health > Life Insurance > Term Insurance

Texas Publicizes State LTC Rate Spiral Rules

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NU Online News Service, Feb. 14, 3:12 p.m. – The Texas Department of Insurance is starting to publicize long-term care insurance rate rules it adopted in December 2001.

The rules implement model LTC insurance regulations approved by the National Association of Insurance Commissioners, Kansas City, Mo., in October 2000. The NAIC developed the model in an effort to prevent insurers from luring consumers with unrealistically low introductory LTC premiums, then demanding big rate increases.

Texas Insurance Commissioner Jose Montemayor has issued a press release emphasizing that insurers must comply with the Texas version of the LTC rate rules by July 1.

“Long-term care insurance is growing in popularity, but rate instability and disclosures concerning possible future rate increases have become serious problems,” Montemayor says in the release, which is posted on the Web at

“These new rules will require companies to be more forthcoming about the possibility of future rate increases,” Montemayor says

The Texas department has posted the new rules, which are authorized by a law based on Texas House Bill 2482, on the Web at

Under the rules, insurance companies selling long-term care policies must give the Texas department actuarial memos or certifications assuring officials that the proposed rates will cover anticipated costs under “moderately adverse experience.”

Insurers must give LTC insurance applicants:

  • The premium rate or rate schedules applicable to the applicant.
  • A 10-year history of premium rate increases on the applicable policy or similar policies in Texas or any other state.
  • Notice that the policy may be subject to rate increases in the future.
  • An explanation of the consumer’s options in the event of a future premium increase.

The Texas department says it could ban an insurance company from selling long-term care insurance in Texas for up to five years if the company habitually files inadequate initial premium rates.


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