Connecticut Rejects LTCI Rate Hike Requests

So far, however, the ratio of claims to revenue for the United of Omaha forms is just 2% on a national basis, and no claims at all have been filed in Connecticut, Paul Lombardo, a Connecticut department actuary, writes in a letter explaining the department’s decision to reject the increase request.

“The Connecticut experience is well below what was expected while nationwide data is also significantly below what was expected, with an actual-to-expected ratio of 0.64,” Lombardo says.

Connecticut law requires an LTCI company to have a ratio of claims to revenue of at least 60% over the life of the policy forms, Lombardo says.

“Any increase at this time would be considered excessive,” Lombardo says.

The inception-to-date loss ratio for the Mutual of Omaha LTCI policies is 0.01% in Connecticut, and the ratio is 4.62% nationally, Lombardo says.

The national claims rate is 11% higher than expected, but the Connecticut claims rate is well below what was expected, Lombardo says.

Mutual of Omaha representatives say the company is seeking regulatory approval for the LTCI rate increases because recent experience indicates premiums on some of the policies are inadequate to fund future benefits.

“This is confirmed by industry trends,” the company says. “The proposed increases are necessary to ensure Mutual of Omaha can meet future obligations to policyholders. Rate increases are being filed nationally; however, the actual amount of the increases are subject to state approval.”

About 18% of the policyholders with affected products will receive no increase, the company says.

Paid-up policies will be not be affected, and policyholders can take several steps, such as reducing the benefit amount or changing the inflation protection option, to avoid an increase in premium payments, the company says.