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California Senate Panel OKs LTCI Premium Bill

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Members of the California Insurance Committee have voted 5-3 to approve Assembly Bill 999, a bill that would affect how long-term care insurance (LTCI) carriers go about increasing rates in California.

The bill would limit the ability of LTCI carriers to take investment returns into account when changing prices on in-force policies.

A.B. 999 also would limit the ability of an LTCI carrier to use the claims for a relatively small group of policyholder to justify rate increase requests, backers say. An insurer would have to use the experience for all similar LTCI policy forms issued and retained by an insurer and its affiliates to justify requests for rate increases.

Another provision would require an insurer to let a consumer see the LTCI policy language before the consumer buys the policy. An insurer would have to make a copy of a policy form or certificate form available within 15 calendar days after the consumer asked to see it.

The bill already has been approved by the California Assembly. The bill still must be approved by the Senate Appropriations Committee before it can have a shot at going to the Senate floor.

The bill was introduced by Assemblymember Mariko Yamada, D-Davis, Calif.

California Insurance Commissioners Dave Jones is supporting A.B. 999. He put out a statement welcoming committee approval of the bill.

“This bill will curb a troubling trend in the number and size of long-term care rate increases,” Jones says in a statement. “Without this legislation, consumers, many on fixed incomes, will continue to face uncertainty, never knowing what rates to expect from year to year.”

Consumer groups, such as California Health Advocates, have argued that the bill could keep cynical insurers from building market user using teaser rates that they know to be unrealistically low, according to an analysis of the bill posted by the California Senate staff.

LTCI carriers have argued that rigid state insurance pricing rules have limited their ability to respond to changes in market and economic conditions and to accommodate new information about how the LTCI market really works.

Analysts in the New York office of Fitch Ratings have suggested that rate rules may be partly responsible for the departure of many carriers from the LTCI market.


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