Consultants that specialize in shutting down unwanted insurance operations want to set up a “run-off facility” for issuers of U.S. long-term care insurance business.
Luann Petrellis of PricewaterhouseCoopers and Richard Newton of International Solutions L.L.C. briefed a group of state insurance regulators, at the Long-Term Care Insurance Task Force, on the LTCI run-off facility proposal last month. The consultants said the facility would give insurers a transparent, carefully regulated place to put unwanted blocks of LTCI business.
A run-off facility that absorbed blocks from many different issuers could help make the process of administering the blocks more efficient, by having one team oversee many blocks, rather than having each issuer continue to handle its own blocks of business, Petrellis told the task force.
The task force is a joint effort of the Health Insurance and Managed Care Committee and the Financial Committee at the National Association of Insurance Commissioners. The Health Insurance and Managed Care Committee included a summary of the LTCI run-off facility presentation in a packet of materials for the NAIC’s summer meeting.
The committee held a session at the meeting, in Philadelphia, Monday.
Petrellis and Newton said the United Kingdom has used a similar run-off facility system to handle hundreds of insurance business transfers.
Jose Montemayor, a former Texas insurance commissioner who now works for an investment company, said Texas used a similar mechanism to handle workers’ compensation business.
State guaranty associations, or groups for insurers that write insurance in a state, are responsible for paying the claims received by insolvent insurers in most states. Peter Gallanis, president of the National Organization of Life and Health Guaranty Associations, or NOLHGA, said the issue of finding the funding to support insolvent LTCI block run-offs will be an important one, according to the briefing summary.
The NAIC provides funding to help representatives from groups speak for consumers in NAIC proceedings. Some other group reps speak for consumers in NAIC proceedings without receiving NAIC funding.
Bonnie Burns, a consumer group rep, asked about provisions for protecting the benefits and other interests of LTCI policyholders with policies transferred to an LTCI run-off facility.
Joe DiMemmo, a Pennsylvania insurance regulator, and Eric Cioppa, Maine’s insurance superintendent, also talked about the need to protect the policyholders.
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