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NAIC Panel Calls for LTCI Model Rate Stability Updates

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The Senior Issues Task Force, an arm of the National Association of Insurance Commissioners (NAIC), says the NAIC should update its long-term care insurance (LTCI) model act and model regulation.

The NAIC, Kansas City, Mo., added rate stability provisions to the models in 2000. At least 37 states have adopted those LTCI rate stability revisions, the task force says in a model law development request form.

The task force adopted the model law development request Sunday in Atlanta, during a session at the NAIC’s summer meeting.

The task force says the model rate stability amendments adopted in 2000 helped ease LTCI underpricing problems.

But, in recent years, “the long term care market place has seen significantly large and/or multiple rate increases on policyholders, including on policies sold under rate stabilization standards,” the task force says. “It appears that the current standards can and need to be improved.”

The task force, an arm of the NAIC’s Health Insurance and Managed Care Committee, also considered an LTCI rate stability proposal developed by task force members.

The proposal calls for any LTCI issuer that asks for a rate schedule change to include certification from a qualified actuary “without the use of the undefined term ‘moderately adverse experience.’”

“If a company in any way markets, advertises, or sells the long term care insurance policy form to which the initial rate filing applies as not requiring a premium rate increase over the life of the policy form, it will be required to have a qualified actuary annually certify that the rates are adequate so that no subsequent rate increase filings will be anticipated over the life of the policy form,” according to the text of the proposal.

If an actuary could not provide the certification, the issuer would have to submit a plan for stabilizing the policy’s rates, according to the proposal text.

“Failure to submit a plan of action to the commissioner within 60 days or to comply with the time frame would be considered grounds for the commissioner to withdraw or modify its approval of the form for future sales,” according to the proposal text.