Florida Helps Conseco Restructure Home Care Block

- Policyholders who are willing to accept a stricter replacement policy will be rewarded with permanent limits on policy rate increases. Policies that replace contracts with lifetime benefit periods will offer a maximum of 7 years of benefits. The new policies also will require insureds to meet claim requirements for at least 20 days before the insureds can begin collecting benefits. Another change will require claimants to get licensed health care providers to certify that they will be unable to perform at least 2 activities of daily living for a period of at least 90 days. In exchange, regulators will cap rate increases at 25% for the first year and 15% per year in later years.

Insurance regulators in states other than Florida will have to approve use of the order in their states, McCarty says.

Conseco President Bill Shea has welcomed McCarty’s order.

McCarty’s course of action “protects policyholders while providing Conseco Senior Health with the ability to both mitigate its losses and enhance its ability to pay future claims,” Shea says in a statement.

Conseco acquired American Travellers Life Insurance Company and Transport Life Insurance Company, the companies that eventually merged to form Conseco Senior Health, in December 1996.

Some policyholders accused Conseco of looting Conseco Senior Health, but McCarty notes in his order that the parent company pumped $534 million into Conseco Senior Health over the past 5 years to subsidize the unit’s home health care losses.