Monday, May 20, 2019

No. 313: Long-Term Care Insurance and More on the Upcoming Hearing before the Virginia Bureau of Insurance

In No. 310 (April 22, 2019), I wrote about the May 21 public hearing to be held by the Virginia Bureau of Insurance (Bureau) on the subject of long-term care (LTC) insurance premium increase requests filed by many companies. April 22 was the deadline for filing public comments in advance of the hearing. On that date, I filed No. 310 as my comment. The Bureau posted on its website all the comments it received from the public, as well as information about the LTC insurance premium increase requests filed by many companies. This follow-up post is based on my review of the material posted on the Bureau's website.

Recent Bureau Approvals
The Bureau recently approved some substantial premium increase requests affecting substantial numbers of policyholders. Here are the companies and, in parentheses, the approved average premium increases expressed as percentages and the numbers of policyholders affected by the increases: American Fidelity Assurance (3%, 92), Jackson National Life (15%, 47), Kanawah Insurance (two plans) (48% and 44%, 1,204), Lincoln Benefit Life (35%, 257), Lincoln National Life (60%, 74), Mutual of Omaha (27%, 1,551), Northwestern Long Term Care (two plans) (28% and 27%, 2,710), Provident Life & Accident (102%, 734), RiverSource Life (35%, 1,305), Senior Health Insurance of Pennsylvania (25.0%, 633), and Virginia Insurance Guaranty Association (32%, 4,121).

Number of Comments
My tabulation suggests the Bureau received 177 comments from the public. I think the ten obscure public notices printed in newspapers around Virginia did not generate such a large number of comments. However, several articles about the hearing appeared in Virginia newspapers, and I think those articles prompted the large number of comments. One example is an excellent article entitled "Insurers now seeking huge increases in Virginians' premiums for long term care." The article, by reporter Dave Ress, appeared in the March 17, 2019 issue of the Daily Press (Newport News, VA).

Nature of the Comments
Many of the comments focused on the financial problems consumers are confronting because of increasing LTC insurance premiums. Many said that, when they purchased the insurance, they were not told the premiums would increase. Many said they were told that, if there were premium increases, the increases would be small and infrequent. Many expressed displeasure about being forced to absorb increases that were not their fault, but rather were caused by the companies' pricing errors. A few comments were from insurance agents who were upset because they had misled policyholders who trusted them.

Companies Identified
Seventy of the public comments did not identify the company with which the writer of the letter is or was a policyholder. Here are the 13 companies identified in 107 of the public comments, with the number of comments in parentheses: CNA Financial (2), CUNA Mutual (3), General Electric Capital (4), Genworth (36), John Hancock (44), Kanawha Insurance (3), Lincoln Benefit Life (1), Massachusetts Mutual (5), MetLife (3), Penn Treaty (2), TPM Life (1), Trustmark (1), and Unum (2).

Among the public comments, several of those who identified John Hancock as their company said they have coverage offered through the group LTC insurance program for federal government employees. I think many of the others who identified John Hancock without mentioning the group plan also have their coverage through the group plan.

There were two public comments that identified the company as the Virginia Life, Accident, and Sickness Insurance Guaranty Association. Those comments were references to Penn Treaty, where a court-ordered liquidation brought the Virginia Insurance Guaranty Association into the picture.

Most of the comments appear to have been from consumers. However, there were a few from agents, groups of agents, and other individuals writing on behalf of policyholders.

The ACLI/AHIP Letter
There were no comments from insurance companies. Instead, as usual, the companies hid behind their trade associations.

The American Council of Life Insurers (ACLI) is a trade association with approximately 290 member companies. America's Health Insurance Plans (AHIP) is a national association whose members provide coverage for health care and related services. ACLI and AHIP filed a joint six-page letter for the hearing record. The letter is over the signatures of Chuck Piacentini of ACLI and Amanda Matthiesen of AHIP. The letter is in the complimentary package offered at the end of this post. Here are the "Recommendation" and "Conclusion" paragraphs of the letter:
To ensure a stable regulatory environment that provides Virginia consumers with choice, transparency and protections for LTC insurance, we encourage the Commission to approve pending actuarially justified rate increases. Additionally, we encourage the Department of Insurance to adopt the most recent changes to the NAIC [National Association of Insurance Commissioners] LTC Insurance Model Regulation (NAIC Model), as well as issue the NAIC LTC Insurance Rate Increase Model Bulletin on Alternative Filing Requirements for LTC Premium Rate Increases (NAIC Bulletin).
We appreciate the opportunity to provide this statement and look forward to working with the State Corporation Commission and the Department of Insurance on creating a regulatory environment that ensures a robust private LTC insurance market that provides consumers with a choice of solid and dependable coverage for their LTC needs. We are committed to ensuring that consumers continue to enjoy the greater piece of mind that comes with knowing their coverage will be there when and for as long as they need it.
General Observations
It is not surprising that ACLI and AHIP "encourage the Commission to approve pending actuarially justified rate increases." The associations represent the companies, and would not be expected to encourage the Commission to deny or reduce the size of the requested premium increases.

The words "actuarially justified" should have been omitted from the "Recommendation" paragraph in the ACLI/AHIP letter.  Those words falsely imply that some premium increase requests are not actuarially justified.  Because company actuaries sign off on all premium increase requests, there is no such thing as a request that is not actuarially justified.  However, it is possible that a Bureau actuary might disagree with a company actuary.

As indicated in No. 310, for many years I have expressed the belief that the problem of financing the LTC exposure cannot be solved through the mechanism of private insurance. I explained in detail the reasoning behind that belief in an article in the July 2008 issue of The Insurance Forum. The article is in the complimentary package offered at the end of this post.

Now LTC insurance companies and their regulators are trying to figure out how to address the intractable problems they have created. I believe that nothing significant will emerge from the latest NAIC task force. I think it will "kick the can down the road," as several task force predecessors have done.

Available Material
I am offering a complimentary 11-page PDF consisting of the ACLI/AHIP letter to the Bureau (6 pages) and the July 2008 Forum article (5 pages). Email and ask for the May 2019 LTC insurance package.