NAIC OKs LTC Insurance Rate Review Structure

Insurance commissioners approved a framework for states to assess long-term care insurance rate filings, even though the American Council of Life Insurers said the program’s pilot program never quite took off.

The National Association of Insurance Commissioners’ executive committee during the association’s spring meeting last week approved the Long-Term Care Insurance Multistate Rate Review Framework to bring cross-border consistency to LTCi policies and pricing. The NAIC expects to have the framework available by September.

The LTCi task force’s goal was to develop a consistent national approach that results in actuarially appropriate LTCi increases being granted by the states in a timely manner and eliminates cross-state rate subsidization that occurs with inconsistent rates.

The ACLI testified during the meeting that although carriers appreciated the work done by the task force over the past two years, the pilot program for the framework “doesn’t seem to have really moved the needle on speed or consistency on the approved amounts,” said Jan Graeber, ACLI senior actuary. She added that insurance companies support the task force’s goal and want to balance interests on all side and reach a workable solution.

The program did lead to a better understanding of the issues and challenges in LTCi, Graeber said, but that insight did not lead to consistency.

“States, even some who have been vocally supportive of this effort, were not willing to forego their own review methodologies,” Graeber said in her testimony, “making companies feel that the process simply added another layer of review and that it seems more efficient to just file with the individual states.”

'Just Not Sustainable'

Graeber encouraged commissioners who support the framework to relay that position to the staff performing the reviews and offered help from ACLI actuaries to educate junior-level actuarial staff at the states.

The ACLI acknowledged that many policyholders are grappling with rates that are very different than what they originally contemplated. That is because the benefit pools have grown so large, Graeber said.

“People have benefit pools that are $500,000, $750,000, where the premium paid is so small in comparison,” she said. “This is just not sustainable and is in conflict with a fundamental principle of insurance that premiums must be reasonable in relation to the underlying benefits.”

The ACLI would like to continue helping shape the final framework but carriers need more information about the process and would like more participation.

“We acknowledged and encouraged the [multistate rate] team to leverage our expertise by discussing this issue collectively,” Graeber said. “Having this broader perspective could enable further refinement of the current process so that carriers would have greater insight into how the process will work and regulators would have a better sense of the level of industry engagement.”

The task force accepted the rate review framework during the NAIC’s fall 2021 meeting, while insurance representatives expressed concern about the lack of transparency, especially with the methodology used to calculate increases recommended by the multistate actuarial team.

Steven A. Morelli is a contributing editor for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers and magazines. He was also vice president of communications for an insurance agents’ association. Steve can be reached at [email protected]

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