Should state insurance regulators require an issuer of long-term care insurance (LTCI) to include a “margin” equal to at least 10 percent of expected lifetime claims to protect against problems?
Or would requiring a 10 percent cushion against hard times simply be a bit of fancy-sounding actuarial mumbo jumbo?
Regulators, outside actuaries and others talked about possible LTCI rate margin requirements and other rate stability proposals recently during a Senior Issues Task Force LTCI issues meeting that took place recently in Reston, Va.
The task force, an arm of the National Association of Insurance Commissioners (NAIC), recently posted audio recordings of the meeting on its section of the NAIC’s website.
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The task force organized the meeting in response to LTCI issuers’ moves to increase rates, and in the hope of making the rates for the LTCI products now being sold more stable.
Bonnie Burns, a coonsumer advocate, said at the hearing that regulators should keep consumers who have done everything insurers and regulators have urged them to do to protect themselves against long-term care (LTC) costs against suffering because of insurers’ pricing mistakes.
One draft of proposed model regulation changes calls for an insurer to include a 10 percent margin for error in the premiums to protect the prices against “moderately adverse experience.”
Patrick Kelleher, president of the U.S. life division at Genworth Financial Inc. (NYSE:GNW), said he thinks the margin should be at least 10 percent.
By now, Kelleher said, Genworth has information about 300,000 LTCI policyholders who have died since the 1970s, about 200,000 who have filed LTCI claims, and about 15,000 insureds who have been over age 90 when they filed their LTCI claims.