State regulators could team up to set up a system that would help issuers of long-term care insurance increase prices more quickly.
The topic came up this weekend in Boston, at the National Association of Insurance Commissioners (NAIC) summer national meeting.
Members of the NAIC’s Long-Term Care Insurance Task Force talked about the idea of creating a multi-state LTCI rate approval system Sunday, at a task force session.
“More discussion is expected in the near term via conference call,” according to a meeting summary.
The task force is a child of two top-level NAIC committees: the Health Insurance and Managed Care Committee and the Financial Condition Committee.
Dean Cameron, the Idaho insurance director, and David Altmaier, the Florida insurance commissioner, are the task force co-chairmen. They led the discussion of the multi-state rate review system proposal.
LTCI Rate Increase Environment
Twenty years ago, consumer groups, many regulators and executives at many LTCI issuers agreed that LTCI premiums should be locked in at the initial levels, to protect older policyholders who might be living on limited, fixed incomes. Because of that philosophy, states impose strict rules and procedures on issuers that want to increase LTCI premiums.
Regulators in some states, including California and Connecticut, continue to take a strict approach when considering LTCI rate increases.
Regulators in many other states have been granting LTCI rate increase requests more readily, because of concerns about LTCI issuer solvency.
In most states, guaranty fund associations are in charge of trying to make good on the benefits promised to consumers by failed insurers. Few guaranty fund associations build up significant reserves by collecting regular dues. Most guaranty associations cope with the cost of member insurer failures by sending bills for assessments to the surviving insurers.
Regulators fear a wave of LTCI failures could lead to big guaranty fund assessment bills for the surviving issuers, and expose the policyholders to gaps between the benefits originally promised and guaranty fund benefits.