Virginia Bureau of Insurance Issues Preliminary Report on Long-Term Care Insurance Premium Rates
The Virginia Bureau of Insurance (Bureau) is doing its part to ensure that long-term care rates and associated issues continue to be in the forefront of the public debate. With its recently issued preliminary report on March 15, 2013, the Bureau provides its initial findings and hints at where it is going with its final report, which is due by September 4, 2013.
The State Corporation Commission (Commission) directed the Bureau to prepare a report that studies long-term care premium rate increases since January 1, 2009. The Commission noted that it had seen an upsurge in the number and frequency of substantial long-term care premium rate increase requests.
In its preliminary report, the Bureau noted that it had engaged the services of Actuarial Resources Corporation of Georgia (ARC-GA) to prepare the report. The final report should provide “an analysis of regulatory options available to potentially strengthen the review of long-term care insurance premium rates in Virginia.” Since the final report will be issued in the fall of 2013, it is certainly possible that the issuance of the report will lead to calls by the Virginia General Assembly to implement one or more of the Bureau’s recommendations. Alternatively, the report could lead to proposed changes to the Commission’s regulations governing long-term care insurance.
The preliminary report also indicated that ARC-GA had reviewed 23 long-term care rate increase filings, and ARC-GA noted that the rationale for the increases were lower lapses and/or mortality than originally planned. ARC-GA also plans to survey the leading long-term care insurers in Virginia and obtain additional information from them.
As a further indication that these issues will continue to draw regulators’ attention, the preliminary report notes that the Bureau has developed a survey to be sent to other state regulators requesting information about any additional testing these states employ or regulations they are considering in their review of long-term care rate increases.
The preliminary report highlights that “more policyholders are expected to continue their coverage and live long enough to need long-term care services than was originally anticipated. This developing experience has required many insurers to reassess their estimates of future mortality, lapse and claim costs.” The report also mentions the low interest rate environment as a possible indirect reason impacting insurers’ decisions to request a rate increase or the level of such increase in Virginia.
Insurers in this market are encouraged to follow the development of and review carefully the final report, as it will no doubt contain important information about what is being done around the country to deal with long-term care rate increase issues, and it may well lead to additional legislative or regulatory activity in Virginia and elsewhere.
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