Changing LTC Products Prompt A Look At Existing Regulations

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Regulators are deciding whether long term care products are changing sufficiently to warrant making changes to existing regulations.

Among the points under discussion while a revamp of the Long Term Care Insurance model act and regulation is being weighed are pooling and the filing of annual rate certifications.

The issues are among 10 talking points that the National Association of Insurance Commissioners, Kansas City, Mo., is looking at to determine whether the models are actuarially up to date.

“Do you pool? How do you pool? And, when do you pool?” were questions that Sheldon Summers, an actuary with the California insurance department, raised during a recent discussion.

Pooling involves combining different blocks of LTC business that a company offers.

Florida requires companies to pool and 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 said they could support pooling.

Julia Philips, an actuary with the Minnesota department of commerce, noted, however, that the pooling must not be unduly prescriptive.

But Bill Weller, a health actuary with Omega Squared, Sedona, Ariz., says that if a company has a policy form that is performing well and one that is not, pooling would put policyholders in the first form at a disadvantage.

Annual rate certifications also were discussed. States using this approach require actuaries to certify that the rates applied for a block of business are sufficient to support that business.

The current rate must be certified as adequate or an application of a rate adjustment must be made, according to Dino. In Florida, there is such a requirement, he says, with the idea being to avoid very large increases at a later date.

A certification could be a good regulatory red flag, Philips said.

Regulators said what they found disturbing was that some company actuaries sent in the certification because it was a requirement and did not actually use the filing as an opportunity to assess the adequacy of rates.

If there were variations from state to state on the certification, those differences could be problematic for companies, Weller said.


Reproduced from National Underwriter Life & Health/Financial Services Edition, January 30, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.