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New York Life seeks LTCI rate increase

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New York Life Insurance Company is asking Connecticut insurance regulators for permission to increase rates on two blocks of long-term care insurance (LTCI) policies.

New York Life would increase rates for 546 holders of Form 5000 policies by an average of 21.1 percent, to $2910

The company would increase rates for 183 holders of Form 4300 LTCI policies by an average of 20.7 percent, to $2,438.

The increases would affect only policyholders younger than 75, the company told regulators.

The rate increases are “needed due to higher than expected policy persistency, including both lower than expected mortality and lower than expected voluntary lapses,” Jeanette Slabaugh, a New York Life senior associate, wrote in the filing cover letters.

Because New York Life is a policyholder-owned mutual insurer, and company policyholders generally get dividends when a product does well, “improvements in the performance of the product could lead to dividends being paid in the future.” Slabaugh wrote.


New York Life began selling the Form 4300 policies in 1997 and ended sales of the policies in 2004.

The company has a total of 39,673 Form 4300 policies in force throughout the United States. The policies generate an average of $1,500 in annual premium revenue.

The company began selling the other policies affected, the Form 5000 policies, in 2002, and it is still selling those policies.

The actual increases on the prices of the Form 5000 policies would be 25.1 percent for policyholders ages 50 and over and 40 percent for holders younger than 50.

New York Life has a total of 76,608 Form 5000 policies in force throughout the country. The policies generate an average of annual premium of about $1,766.

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The rate increases would apply both the policy forms and to any riders.

“Normal New York Life renewal commission rates will be applied to any increase in premium,” Sheryl Babcock, a New York Life actuary, wrote in the actuarial memoranda accompanying the filings.

New York Life sold the policies affected by the filings through both career agents and through brokers, and it put applicants through an individual underwriting process that, in some cases, might have included face-to-face assessments and reviews of medical records, the company said.

New York Life received permission from regulators to increase the rates on new Form 5000 business in January 2012, but it has not applied for any other increases on the Form 4300 or Form 5000 policies before, the company said.


William Werfelman, a spokesman for New York Life, said in a statement that pressures from the differences between the original LTCI pricing assumptions and actual experience “have forced a number of insurers to exit the long-term care insurance market in recent years.”

“New York Life is committed to helping Americans meet their need for easing the burden of long-term care,” Werfelman said.

As a mutual insurance company, New York Life makes decisions to benefit policyholders, not stockholders, but the company has an obligation to policyholders to make sure that products are priced adequately, Werfelman said.

Company managers believe the company must raise rates to narrow the gap between the original pricing assumptions and actual experience, Werfelman said.

Getting individual states to approve the premium increases will take time, and even the earliest increases would not come until January 2014, Werfelman said.

A policyholder will be able to hold premiums steady by agreeing to a reduction in benefits.

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