NU Online News Service, Jan. 27, 2004, 6:41 p.m. EST – Regulators are deciding whether it’s time to take another look at long term care products.[@@]
A group at the National Association of Insurance Commissioners, Kansas City, Mo., is conducting a review to determine whether the Long Term Care Insurance model act and regulation are actuarially up to date.
One of the topics coming up in discussions is pooling. In this context, pooling means combining data for the different blocks of LTC business that a company offers.
Florida is one of the states that pools. The approach can offer insight into claims costs and patterns of claims costs, says Frank Dino, an actuary with the Florida Department of Financial Services.
Other regulators say they can support pooling.
But Bill Weller, a health actuary with Omega Squared, Sedona, Ariz., warns that pooling could hurt some policyholders. If a company has one policy form that is performing well and a second that is not performing well, pooling would put the policyholders in the first form at a disadvantage, Weller says.
Annual rate certification is another topic coming up in regulators’ discussions.
States using this approach require actuaries to certify that the rates applied to a block of business are sufficient to support that business.
An actuary must certify the current rate as adequate or the insurer must apply for a rate adjustment, according to Dino. Florida requires certification to avoid the possibility that insurers later will ask for very large increases, Dino says.
Regulators say they find it disturbing that some company actuaries seem to be sending in rate certifications simply because it is a requirement and do not seem to be using the certification process to assess the adequacy of rates.