NAIC approves LTCI bulletin model

The drafters of the bulletin note that the NAIC tried to improve LTCI rate stability with a model regulation adopted in 2000. The model would classify policies as “pre-rate-stability forms” and “post-rate-stability forms.”

A regulator would ask an LTCI carrier for an independent actuarial analysis of a proposed rate increase. The regulator and the insurer would try to consider whether policyholders would be better off if the insurer imposed a single rate increase, then agreed not to implement additional increases for at least three years, or if policyholders would be better off if the insurer phased the increase in over a three-year period.

The bulletin says post-rate-stability policies already must provide some benefits — contingent benefits — if an LTCI policy lapses.

The bulletin calls for an LTCI carrier to provide contingent benefits for pre-rate-stability policies if the policies lapse because the carrier has imposed a large rate increase.

In some cases, the bulletin says, a regulator might require an insurer to provide a contingent benefit for any policy that lapses if the policy has reached its “twentieth duration.”

Elizabeth Festa contributed information to this report.

See also:

• NAIC to consider LTCI market conduct forms
• Regulators eye effects of LTCI rate increase
• Senior panel to consider LTCI model update