State agency approves long-term care insurance rate hikes

April 27--The Pennsylvania Insurance Department has announced approval of rate hikes for four companies selling long-term care insurance whose requests for large increases prompted a state hearing last month.

The rate hikes affect in different ways 46,525 existing policyholders covered by four companies: Genworth Life Insurance, John Hancock Life Insurance, Metropolitan Life Insurance and Unum Life Insurance. The policies are designed to protect individuals from the high cost of nursing homes, assisted-living housing or home care aides should they become frail enough for the coverage to kick in.

Insurance companies in recent years have sought state approval for substantial increases in long-term care insurance rates, based on miscalculations made decades ago of how much revenue they needed to ensure future policy claims could be paid.

Generally, the state Insurance Department has been capping such increases at 20 percent annually to soften any one-time rate shock for consumers. Policyholders also generally have options of minimizing the hikes personally by making use of options that reduce their coverage, such as changing the inflation rate or reducing the number of years they would qualify for benefit payments.

The companies were approved to impose rate hikes as follows:

--Genworth: Requested an average 80 percent increase affecting 27,551 policyholders and was allowed a 30 percent increase for policies with lifetime benefits and 15 percent for policies with limited benefit periods.

--John Hancock: Requested an average 22 percent increase affecting 7,572 policyholders and will be permitted hikes of up to 20 percent.

--Metropolitan: Requested an average 50 percent increase affecting 6,573 policyholders and was allowed 20 percent.

--Unum: Requested an average increase of 17.7 percent or 24.8 percent, depending on the type of policy held by its 4,829 customers, in each of the next three years. It was approved for lower annual increases of either 13 percent or 18 percent, but taking place in each of the next four years instead of three.

Gary Rotstein: grotstein@post-gazette.com or 412-263-1255.

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