Marianne Harrison traveled to Delaware today to testify at a hearing on the long-term care insurance rate increases John Hancock Long-Term Care has proposed for that state.
Harrison said Hancock, Boston, a unit of Manulife Financial Corp., Toronto (TSX:MFC), will try to shield policyholders from the full impact of the increases as much as policyholder and will leave any policies that were sold to consumers who were 80 or older at the time of purchase as is.
“We are not increasing rates more at younger ages to compensate for this,” Harrison said, according to a written version of her remarks posted on the Delaware Insurance Department website.
John Hancock Life Insurance Company (U.S.A.), the Manulife subsidiary that wrote the policies, is asking for permission to increase rates on 1,199 in-force long-term care insurace (LTCI) policies an average of 36.3%.
The proposed Delaware increases are part of a national wave of increases. Hancock first warned producers about the increases in September 2010.
The Delaware policies that would be affected by the proposed increase were written from 1991 to 2009. The increases proposed for specific blocks of policies range from 21.5% — for a block of Custom Care II policies written from 2004 to 2006 and a second block of Custom Care II policies written from 2004 to 2009 — up to 71.1%, for two blocks of Custom Care policies written from 2002 to 2004.
Due to the formula used to apply the increases, rate for some policyholders could go up 90%, Hancock says in its rate filing.
The company previously increased rates on the policies an average of 13% in 2009.
“The rates that we are requesting for your approval are the ultimate rates that we believe are necessary in order to certify that the revised premium rate schedules are sufficient to cover anticipated costs if underlying assumptions are realized, with no future premium increases anticipated,” Carol Folsom, a Hancock consultant, says in the rate filing.
LTCI policyholders who are paying for an inflation protection option could avoid any premium increase by reducing inflation protection, Folsom says.
Arthur Lucker, an actuary at INS Consultants Inc., Philadelphia, says in a memorandum submitted to the Delaware department that he believes the proposed increases are actuarially justified.
In recent months, Manulife has indicated that it views LTCI has a product not targeted for growth.