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Connecticut rejects LTCI rate hike request

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The Connecticut Insurance Department is refusing to let an insurer increase premiums for the holders of 28 individual long-term care insurance (LTCI) policies.

The insurer, United Teacher Associates Insurance Company, a unit of American Financial Group Inc. (NYSE:AFG), asked for permission to raise rates by 20 percent on the Advantage Individual and At Home Advantage LTCI policies still in force in Connecticut.

United Teacher is also trying to increase premiums for holders of a total of about 11,000 LTCI policies in other states.

Dawn Helwig, a consulting actuary at Milliman, said an actuarial study shows that overall claims for the United Teachers LTCI policies are likely to be much higher than the company expected.

Claims on the policies will be high enough to justify a 161 percent increase for the Advantage Individual policies and a 65 percent increase for the At Home Advantage policies, Helwig estimated in a rate filing.

Paul Lombardo, a Connecticut department official, said in a denial letter that United Teacher originally predicted a minimum lifetime loss ratio of 60 percent.

From 1999 through 2012, the actual national loss ratio for the Advantage Individual and At Home Advantage policies has been 13.9 percent, and the loss ratio for the policies sold in Connecticut has been just 1.65 percent, Lombardo reported.

“Any [premium] increase at this time would be considered excessive,” Lombardo said.

The Connecticut department has made similar arguments when rejecting recent LTCI requests filed by other insurers, including RiverSource Life Insurance Company and John Hancock Life Insurance Company.

Representatives from American Financial did not respond to an e-mail seeking comments on the rate ruling.

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