The Connecticut Insurance Department has rejected efforts by Mutual of Omaha Insurance Company and an affiliate, United of Omaha Life Insurance Company, to increase rates on some individual long-term care insurance (LTCI) policies already in force.
The 18.7% increase would have affected 282 fully underwritten policies sold to Connecticut residents from 2004 through 2009 to adults ages 18 through 79.
The 19.8% increase would have affected 18 fully underwritten United of Omaha policies sold to Connecticut residents from 2006 through 2009 to adults ages 18 through 79.
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In April, the Connecticut department rejected efforts by Mutual of Omaha to increase rates on 337 Connecticut LTCI policies by an average of about 33%.
Earlier this month, Mutual of Omaha said it was responding by low interest rates, lower-than-expected LTCI lapse rates and higher-than-expected claims by suspending the sale of new multi-life LTCI programs and eliminating some individual LTCI policy features and options.
Mutual of Omaha cited studies in which actuaries had concluded that LTCI lapse rates will be lower than expected and claims higher over the life of the policies.
The company says the type of policies affected by the 18.7% rate increase request has an actual lapse rate for policies with a duration of 5 years of 2%. When the company wrote the policies, actuaries assumed the 5-year-duration lapse rate would be 3%.
For the United of Omaha policies, the original 5-year lapse rate assumption was 2.4% and the actual 5-year lapse rate has been 2%, the company says.