State insurance regulators are facing a painful fight over the liquidation of two troubled long-term care insurance (LTCI) issuers: Penn Treaty Network America and Penn Treaty’s sister, American Network Insurance Company.
State guaranty funds are already using assessments imposed on life insurers to supplement the company’s assets and pay benefits up to each state’s guaranty limit.
Life insurers want administrators to use Penn Treaty’s assets to try to make up some of the difference between the state guaranty limits and what the policyholders paid for.
A coalition of health insurers wants administrators to cap benefits at the state guaranty limits, and not to use Penn Treaty’s remaining assets to make for the gap,
Members of the Receivership and Insolvency Task Force, a panel that’s part of the National Association of Insurance Commissioners, have been posting interest group letters concerning the battle on the panel’s section of the NAIC’s website.
Penn Treaty and its sister company, American Network Insurance Company, helped create the modern LTCI market.
The companies ran into trouble because problems with underpricing and inaccurate assumptions about policyholder behavior and investment returns.
Pennsylvania regulators won court permission to liquidate the companies in 2017.
In most states, guaranty funds aim to provide about $300,000 to $500,000 in LTCI benefits per policyholder.
Instead of paying regular premiums into a pot, each insurer makes an assessment payment when another insurer that belongs to the same guaranty association fails.