The Connecticut Insurance Department is reviewing three applications for big rate increases on individual long-term care insurance (LTCI) policies.
Continental General Insurance Company is asking for an average increase of 256.2 percent on its base LTCI policy forms and riders, and a 381.2 percent increase on the inflation protection riders’ percentage load. Great American Insurance Group, the parent of Continental General, says it will accept an increase of 25 percent on the base policy forms and riders, and a 50 percent increase on the inflation protection riders at this time.
Continental General sold the policies starting in 1995 and later discontinued them. The policies now cover 70 people in Connecticut and 7,178 people throughout the country.
If Connecticut approved the full increases requested there, the average premium in Connecticut would increase to $3,276 per year, from $2,621.
John Hancock, a unit of Manulife Financial Corp. (TSX:MFC), is asking for an average increase of 182 percent for about 200 policies sold in Connecticut by Time Insurance Company. John Hancock has assumed responsibility for the policies through a reinsurance arrangement with Time’s former parent, Fortis.
Time started selling the policies in 1997 and stopped marketing them in 1999.
If approved and implemented in full, the Time increase request would lead to the average premium in Connecticut rising to $5,618 per year, from $1,990.
John Hancock is also the reinsurer for a block of LTCI policies issued by Union Security Insurance Company. John Hancock is asking for a 192 percent increase request in Connecticut.
Union Security started selling the policies in 1998 and stopped selling the policies in 2002.
The policies cover about 200 people in Connecticut.
All of the companies said the cost of providing LTCI benefits has turned out to be much higher than expected. In the Time and Union Security rate filings, John Hancock says the high number of people expected to draw lifetime benefits is much higher than what the issuers expected when they priced their products.