Penn Treaty American Corp. says it has asked regulators in all 50 states for permission to raise premiums on old long term care insurance policies by an average of 50%.
Penn Treaty, Allentown, Pa., started filing for the rate increases last year on policies issued before 2002 to offset higher projected benefit costs, according Penn Treaty Chief Executive William Hunt Jr.
The effort to increase rates will continue through 2008, and it affects policies that generate about $190 million of Penn Treaty’s $307 million in annual LTC insurance revenue, Hunt said during an investor conference call.
“Policies that fall within our preferred and premier underwriting classes have unlimited benefits and inflation protection and are primarily driving the need for these rate increases,” Hunt said.
Penn Treaty already has won approvals for requested increases from 27 states, for policies that generate about $87 million in annual premiums, Hunt said.
“We anticipate that more approvals will be granted through the end of 2007 and into 2008,” Hunt said.
In some cases, Penn Treaty has received a smaller rate increase than it had requested, Hunt said.
Increases approved so far have averaged about 30% and will take effect anywhere from a month to a year following approval, Hunt said.
Hunt predicted Penn Treaty will net an average 35% to 40% increase once state regulators have acted on all of the company’s increase requests.
To make the increases more palatable to regulators and clients, the company will stagger most of them over 1 or 2 years following approval, Hunt said.