Regulators Discuss Tweaking LTC Reg

The size of rate increase requests was offered as one reason why it was important to look at how current laws work. Unfortunately, when companies need rate increases, they are not 5-10% but more in the range of 30%,? said Frank Dino, a life actuary with the Florida insurance department.

Dino says all rating cells or blocks of policies need to comply with requirements of the model, not simply an aggregate test of those blocks.

But others, such as Bill Weller, representing America’s Health Insurance Plans, Washington, have argued that the intent of this provision was to allow the regulators to review the general level of key assumptions for pricing (including margins) and not that all cells have sufficient margin to meet tests in the model reg.

However, Dino said that if some LTC riders do not have sufficient surplus, then that might not be reflected in an aggregate test. For instance, regulators discussed an inflation rider and how the sufficient reserves depended on how many consumers purchased it.

Competition is causing pricing to be reduced and, often aggregate tests are being used, Dino said. The current model did not intend to permit underpricing of coverage, he added.

Reproduced from National Underwriter Edition, May 28, 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.