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State regulators may vote on LTCI rate proposals

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State insurance regulators are getting ready to vote on proposals that could affect the ability of long-term care insurance (LTCI) issuers to set initial product prices and pass increases on to policyholders.

The National Association of Insurance Commissioners (NAIC) has put a package of amendments to Long-Term Care Insurance Model Regulation (Number 641) on the agenda for the next session of its executive committee and plenary. The NAIC plans to hold the session Aug. 19, at its summer meeting in Louisville, KY.

The regulators who created the LTCI rate package want insurers to provide more actuarial analysis when they set product prices, to show that the prices can hold up even in bad conditions. They also want insurers to do more to justify any requests for increases in premiums for in-force policies.

See also: Massachusetts drafts LTCI rate regs

The proposals set new rules for “exceptional” LTCI rate increases. A state insurance commissioner already can provide “exceptional increase” status for an increase request if the commissioner thinks the request is justified due to changes in laws or regulations or to an unexpected, marketwide spike in benefits utilization. The proposed model amendments would require that 70 percent of the present value of projected additional premiums from exceptional increases be returned to policyholders in the form of benefits.

In a drafting note, drafters suggest that, “States may want to consider examining their statutes to determine whether a persistent practice of filing inadequate initial premium rates would be considered a violation of the state’s unfair trade practices act and subject to the penalties under that act.”

The NAIC executive committee sets priorities for the NAIC. A plenary session gives all of the states and other jurisdictions that belong to the NAIC a chance to vote on NAIC actions. The NAIC has no direct ability to change states’ insurance laws and regulations, but states often base their insurance rules on NAIC models.

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