The National Association of Insurance Commissioners is developing a new executive-level committee that will try to harmonize long-term care rate increases across states, according to remarks from Eric Cioppa, NAIC president and Maine superintendent of insurance.
Cioppa spoke at a regulatory conference in Washington March 6 to discuss key initiatives of the group, and briefly raised the issue of long-term care reserves and rates, and how the NAIC was handling them. He also briefly spoke with ThinkAdvisor on the sidelines of the Networks Financial Institute-sponsored conference about it.
The committee would try to establish a uniform practice for granting rate increases to LTCI blocks. Issuers of the policies in the blocks say they are struggling to take in enough premiums to support the costs of paying the policy benefits.
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Assumptions made by actuaries in previous decades did not factor in a long period of low interest rates, longevity, cost of care and illnesses associated with living longer, the issuers say.
A review of issuers’ rate filings shows the issuers are limiting many rate increase requests to amounts the issuers hope state regulators will grant. The issuers often assert that their claims experience and projections justify much larger increases — sometimes over 200%, or even 500%.
Many of these insurers have closed blocks of business, meaning that they are no longer taking new LTCI customers.
Regulators in some states have contended that many of the large increase requests were unreasonable, or were not justified by the issuer’s experience in the regulator’s own state.
The rate review harmonization committee would try to establish uniform standards for handling increase requests.