What should long-term care insurance (LTCI) pricing actuaries do when an LTCI carrier is suffering from terrible investment returns?
That depends, according to the drafters of an LTCI pricing note.
The Long-Term Care Practice note work group, an arm of the American Academy of Actuaries (AAA), Washington, is developing the note – Long-Term Care Compliance with the National Association of Insurance Commissioners Long-Term Care Insurance Model Regulation Relating to Rate Stability – to help actuaries use a long-term care insurance (LTCI) rate stability model regulation that was approved by the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., in 2003.
The model calls for an LTCI carrier to get an actuary to certify that a proposed LTCI price change will be sufficient to cover anticipated costs “under moderately adverse experience,” and that the proposed rates should be high enough to be sustainable over the life of the form, with no future premium increases anticipated.
States can choose whether to implement NAIC models and how to do so.
Interest groups in California, for example, have been asking that state to adopt a modified version of the NAIC model.
The AAA work group note would provide non-binding guidance for actuaries who provide LTCI pricing certification in states with rate stability rules based on the NAIC model, the note drafters say.
The work group recently pushed the comment deadline for the draft back to July 8, from .
The draft note covers topics such as the process for pricing initial LTCI premium rates, the process for preparing rate increases for in-force LTCI policies, and reporting requirements for LTCI rate filings and certifications.