State insurance regulators and insurance industry groups are talking about how to handle insurers with small, closed blocks of long-term care insurance business on their books.
Regulators may exempt small, closed blocks of long-term care insurance business from the kind of asset adequacy analysis required of active long-term care insurance issuers, and of carriers with large closed blocks of long-term care insurance business, according to conference call minutes included in a National Association of Insurance Commissioners meeting packet.
The Kansas City, Missouri-based NAIC, a group for regulators, completed a quarterly meeting in San Diego Tuesday.
At the meeting, the Long-Term Care Actuarial Working Group hear a report on ideas about reviewing requests for rate increases for small blocks of long-term care insurance business.
The working group has also been talking about methods for checking to see whether insurers have enough assets backing the long-term care insurance policies they have written.
The term “closed block” refers to a group of insurance policies written by an insurer that no longer sells that type of business.
Fifteen years ago, many insurers were experimenting with selling long-term care insurance coverage. Now, only about a dozen insurers still sell stand-alone insurance. Even some of the remaining active writers have put older policies in closed blocks, to distinguish the older policies from newer policies written under much different rules. The number of issuers with closed blocks of long-term care insurance business on their books appears to be much greater than the number of active writers,
The authors of a draft actuarial guideline included in the meeting packet have suggested setting the minimum size for a “major long-term care block” at 1,000 policies.
Some industry representatives have argued that requiring a full actuarial analysis of the small blocks would be too burdensome, and actuaries have told regulators that a block needs to have a minimum number of policies for some kinds of analyses to be useful.