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Commissioners Ask: Should LTCI Sales Continue?

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Commissioners: Should LTCI Sales Continue?


Salt Lake City

During a discussion of how to better regulate the sale of long term care insurance, two commissioners raised the question of whether the product should continue to be sold at all.

The discussion here at the spring meeting of the National Association of Insurance Commissioners focused on how to improve the Long Term Care Insurance model act and regulation and, in particular, addressed the issue of post-claims underwriting.

Wisconsin Insurance Commissioner Jorge Gomez said discussion may be needed to determine “whether or not it is viable and should even be sold.”

Florida Commissioner Kevin McCarty concurred, commenting, “the overarching issue is whether the product is suitable for anybody.”

The remarks followed a presentation by Paul Roller, an attorney, who detailed alleged industry problems centering on post-underwriting claims that were denied seven years after a contract holder started paying premiums on the contract because the contract holder was deemed to have had the condition at the time of purchase.

Roller detailed problems he had found in representing clients on long term care cases. Among the issues he raised were incentive-based systems that pay bonuses based on dollars saved on LTC policies, the recission rates of LTCI contracts that show up on Schedule F filings of companies filed financial statements, and the need for standardized applications because of the “abominations” of some of the applications that currently were being given to consumers to fill out. Creating an application is a balance between obtaining the proper information and making questions understandable to a consumer, he noted.

There are three issues that need to be looked at, according to Bonnie Burns, an NAIC-funded consumer representative: market conduct issues, post-claims underwriting and agent issues. “The industry has an obligation to underwrite people at older ages and if they choose not to do it, they should not do it later on.

“I dont necessarily agree that the product shouldnt be sold. Certain people have gotten value from it. But it is an issue that has to be looked at,” Burns said.

One solution raised was the creation of an incontestability period in LTCI contracts.

Reproduced from National Underwriter Edition, March 17, 2005. Copyright 2005 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.


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