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Texas Tells LTCI Issuers to Write Better Rate Hike Letters

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Insurance regulators in Texas seem to think some issuers of long-term care insurance (LTCI) are sending Texas residents unclear letters about LTCI rate increases.

The Texas Department of Insurance is concerned enough about the quality of LTCI rate hike letters that it has sent a bulletin about the topic, #B-0010-18, to all insurers that offer LTCI coverage in Texas.

The department “strongly encourages carriers to use plain language in all rate change notices and other communications,” department officials write in the bulletin.

(Related: The Dreaded LTCI Premium Increase Notice)

An LTCI rate hike notice should clearly explain the rate change, the consumer’s options, how to get more information, and any deadlines, officials say.

Officials also list some of the laws that apply when insurers ask for LTCI rate increases.

“You must explain why a rate adjustment was necessary, and the increase must be certified by an actuary credentialed by both the Society of Actuaries and  the American Academy of Actuaries,” officials write. “The explanation of the increase should not be false or misleading.”

Officials note that the Texas insurance commissioner can reject an increase that conflicts with Texas laws or statutes or appears to be unnecessary.

Consumer groups once argued that the issuer of an LTCI policy should never increase rates, because most of the policyholders would be retirees.

Since about 2000, many issuers have applied for large increases. The issuers have argued that they need the increases because policyholders have been somewhat more likely to file claims than expected; policyholders have been much more likely to keep their policies in force than expected; and investment earnings on bonds have been much lower the LTCI issuers had expected.

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