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Insurance Groups Shape Hawaii Life-LTC Proposal

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Lobbyists for the National Association of Insurance and Financial Advisors (NAIFA) and the American Council of Life Insurers (ACLI) have persuaded Hawaiian lawmakers to soften a life-linked long-term care (LTC) benefits study bill.

The new version of the bill, Senate Concurrent Resolution 44, adopted Friday by the Senate Human Services Committee, asks the state insurance commissioner to form a task force to look into the feasibility of using life settlements, viatical settlements and accelerated life insurance policy death benefits to pay for LTC services.

The old version implied that Hawaii might require insurers to make accelerated death benefits provisions a standard life policy feature.

The lead sponsor of S.C.R. 44 is state Sen. Suzanne Chun Oakland D-Sand Island, the chairman of the Human Services Committee.

Hawaiian lawmakers have been considering a number of long-term care insurance (LTCI) bills that grew out of the work of a Hawaii Long-Term Care Commission.

One bill could create a Long Term Care Partnership program in Hawaii. Another could create a task force that would explore the feasibility of setting up some kind of limited government LTC program.

Cynthia Takenaka, executive director of the NAIFA Hawaii chapter of the National Association of Insurance and Financial Advisors, noted in a written comment on S.C.R. 44 that Hawaii has not adopted the standard accelerated death benefits law developed by the National Association of Insurance Commissioners, Kansas City, Mo.

Hawaii let its old viatical settlements law expire in 2010.

Takenaka said NAIFA supports the general intent of S.C.R. 44, would like to see Hawaii consider adopting the NAIC accelerated death benefits model, and would like to see lawmakers recognize the disadvantage of creating an accelerated death benefits mandate.

In some cases, Takenaka said, insurers leave out accelerated death benefits features to keep premiums low.

“Mandating benefits in insurance policies will increase the cost of the insurance,” she said.

Oren Chikamoto, a Honolulu lawyer who represents the American Council for Life Insurers, Washington, said the Hawaii Long-Term Care Commission made no apparent attempt to consult with insurance industry representatives before drafting the report that was used as the basis for S.C.R. 44.

“Egregiously omitted is any economic analysis of the practical result on the Hawaii insurance market should the report recommendations pertaining to compulsory accelerated death benefits be adopted,” Chikamoto said.

Meanwhile, Hawaii now has no viatical settlement law. “Until there is a viatical settlement law enacted, it is impossible to study whether viatical settlements contribute any value whatsoever,” Chikamoto said.


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