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Regulators Roll up Sleeves On Host Of Issues

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Action taken by state insurance regulators recently include endorsing a long term care data report, voting on changes for an external review model, and adopting a charge to develop a model to facilitate enactment of a genetic anti-discrimination law put in place by Congress.

Regulators, through the National Association of Insurance Commissioners, Kansas City, Mo., also discussed suitability of annuity sales and a project to create reserving for principles-based reserving.

A long term care data call analysis and report was unanimously adopted during a joint conference call of the NAIC’s Health Insurance and Managed Care “B” Committee and Market Regulation and Consumer Affairs “D” Committee. The joint committee report is not an NAIC report and therefore, does not need to be fully adopted by the NAIC. However, the Committees’ minutes will be adopted by the executive committee and plenary when the NAIC meets in San Francisco for its summer meeting.

The report contains data collected from 23 companies. It provided the following information:

–Total policies in force at the beginning of each year increased by 8.9% since 2004 to over 3.7 million policies;

–Policies issued per year for each type are decreasing with nursing home policies having the largest decrease of 56% since 2004;

–The actual lapse ratio for individual companies varied with lapse ratios ranging from below 1% to over 9%;

–Total complaints reported directly to the companies have increased by 123% since 2004 (1,785 to 3,983) and complaints regarding claims increased the most by 174.7% (708 to 1,945); and,

–Claims for comprehensive policies have increased each year and by 27% since 2004. and claims for nursing home policies have increased each year and by 11% since 2004.

Publicity surrounding the payment of long term care claims by insurers resulted in Congress taking a look at the issue and U.S. Senators including Sen. Hillary Clinton, D-N.Y., and Sen. Barack Obama, D-Ill., to call for a review by the General Accounting Office.

U.S. Sen. Charles Grassley, R-Iowa, called on the NAIC to collect LTCI data and the NAIC started to develop the report.

The “B” Committee also took action on 2 other items:

–adopting the Uniform External Review model act as recommended by the Regulatory Framework “B” Task Force; and,

–adopting a charge for the Senior Issues Task Force to amend the Medigap models to conform to the new Genetic Information Nondiscrimination Act of 2008.

During the conference call, it was noted that the NAIC has until Oct. 31, 2008 to amend the models to comply with the new genetic information law which becomes effective July 1, 2009.

This will be a test for the NAIC because if the changes can not be made in time, the Centers for Medicare and Medicaid Services has the authority to implement necessary changes, according to Joel Ario, acting Pennsylvania insurance commissioner.

The Uniform External Review model was adopted unanimously with 2 abstentions Colorado and Maryland. Colorado Insurance Commissioner Marcy Morrison said that a 4 month waiting provision before an external review was undertaken was too long a timeframe, noting that a 30-60 day timeframe was more appropriate.

Separately, the new suitability of annuity sales working group of the Life Insurance and Annuities “A” Committee established a charge to look at the possibility of developing a new model that would create more uniformity and help strengthen agent training of the sale of annuities.

Kelly Ireland, a representative for the American Council of Life Insurers, Washington, said that 35 states currently have either a version of a suitability law for seniors or one that covered all consumers. She urged regulators to consider making any changes through rulemaking rather than through development of a model act that would require action by legislatures.


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