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Connecticut stops Unum unit LTCI rate increases

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The Connecticut Insurance Department is continuing to take a tough approach to reviewing applications for premium increases for in-force long-term care insurance (LTCI) policies.

The department has rejected an application for an average increase of 45 percent for group LTCI policies issued by UNUM Life Insurance Company of America.

UNUM Life, a unit of Unum Group Corp. (NYSE:UNM), stopped writing group LTCI policies in 2012, but it still has 2,217 group LTCI policyholders in Connecticut.

In February, Connecticut rejected a rate increase application that Unum filed for a block of LTCI policies written by another unit, Provident Life & Accident Insurance Company.

Connecticut regulators have rejected several other insurers’ LTCI rate increase applications in the past few years based on the argument that, although studies showed claims might be high over the lifetime of the policies, the actual cost of LTCI claims in Connecticut had been low.

Connecticut claim costs for the policies in the UNUM Life group LTCI block have been about 123 percent higher than Unum had expected, according to Paul Lombardo, a Connecticut Insurance Department actuary.

Experience “is projected to result in lifetime loss ratios that not only exceed the minimum 65 percent but could potentially exceed 100 percent,” Lombardo writes in an explanation of the decision the reject the rate increase application.

The national experience numbers have more statistical credibility, and, at the national level, UNUM Life group LTC claim costs are about 63 percent higher than expected, Lombardo writes.

But 2013 Connecticut claims looked better than the 2012 claims, and Unum won’t start implementing a 30 percent rate increased that was approved in November 2012 until June 2014, Lombardo writes.

Lombardo says he wants to see how the 30 percent increase affects the loss ratio before he approves another rate increase.

Unum said in a statement that the company works with all departments of insurance to make certain rate filings reflect regulatory requirements.

“We look forward to ongoing discussions and filings in Connecticut,” the company said.

CORRECTION: The surname of the Connecticut department’s insurance actuary was misspelled in an earlier version of this article. His name is Paul Lombardo.

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