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State Regulators Post LTC Insurance Rate Review Draft

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What You Need to Know

  • The draft framework could promote a consistent national approach for reviewing LTCI rate proposals.
  • Sections covering topics such as actuarial review and reduced benefit options are marked as pending.
  • The rate advisory report would include a review of solvency-related aspects and a review of the reasonableness of any reduced benefit options to be offered.

The Long-Term Care Insurance Task Force is asking for public comments on a proposal that could help states join together to provide faster, more consistent reviews of insurers requests for increases in long-term care insurance (LTCI) premiums.

The task force — an arm of the National Association of Insurance Commissioners — has posted a draft of a Long-Term Care Insurance Multi-State Rate Review Framework.

The framework could eventually form the basis for a system states could use to join together to review insurers’ LTCI premium change applications.

The History

The issue is of keen interest to insurers because low interest rates and inaccurate insurer assumptions about policyholder behavior have led to many LTCI issuers reporting that actual claims have been much higher than what the issuers had originally included in the calculations used to set premiums.

Some states, such as California, have been more resistant to insurers’ LTCI rate increase requests others.

Regulators in some states have argued that states that are too tough on LTCI rate increase requests may cause the issuers to impose even bigger increases on the residents of the states with regulators that do approve adequate rate increases.

The Text

Proposal drafters say in the introduction at the start of the document that the NAIC told the Long-Term Care Insurance Task Force, in a charge, to create a consistent national approach to LTCI rate change reviews that “results in actuarially appropriate increases being granted by states in a timely manner.”

“Considering that charge and the threat posed by the current LTCI environment both to consumers and the state-based system of insurance regulation, the LTCI Task Force developed this framework for a multi-state actuarial rate review process,” officials say.

A multi-state actuarial team, consisting of five to seven actuaries, would help run the program and prepare a general multi-state advisory report.

The report would review matters such as financial solvency-related aspects and the reasonableness and clarity of any reduce-benefit options that might be offered.


The framework drafting team says the multi-state actuarial reviews would be confidential.

Birny Birnbuam, executive director for the Center for Economic Justice, who is one of the representatives who speak up for consumer interests in NAIC proceedings, has suggested that the advisory reports should be available to the insurers involved and to members of the general public.

(Image: Diego M. Radzinschi/ALM)