By Robert Dixon
A bill under consideration in the Illinois legislature would cap long-term care insurance (LTCi) rate hikes at 15 percent annually.
The bill was introduced by Rep. Robyn Gabel (D-Evanston) last month, and is currently under consideration by that chamber’s insurance committee.
Gabel told InsuranceNewsNet she agreed to sponsor the bill, after an insurance company she declined to name implemented a 200 percent rate hike a couple of years ago. Constituents complained to her that they bought policies from the insurer in question thinking they were level-premium policies with rates that would not increase because of the policyholder's age or changes in health status, Illinois department officials said.
Gabel called the Illinois Department of Insurance and was told there was nothing they could do about it at the time. When the department later approached her to sponsor the bill, she agreed.
The bill would amend current Illinois law to require that rate hikes be capped at 15 percent. Insurers would be required to present evidence supporting the need for the increase, and the state insurance commissioner retains the right to reject any proposed rate hikes.
Illinois lawmakers are currently trying to work out a deal that makes sense for both sides in the debate. Gabel’s objective with the bill? “I don’t want to see any more 200 percent rate hikes,” she told INN.
Significant LTCi rate hikes have been brought on by growing claims as health care costs escalate and those in need of long-term care are living longer while interest rates remain low.
The Illinois effort may be part of a trend. In mid-February, the Connecticut Insurance Department limited increases on four blocks of LTCi policies issued by Genworth to 40 percent, and rejected its proposal for an increase on a fifth block of policies.
Several insurance companies have exited the LTCi market in recent years, among them Prudential, CNA and MetLife.
On March 6, Genworth announced that it was halting sales of its current LTCi products in California as of March 21. The company is developing a new LTCi offering, called Privileged Choice Flex, that it plans to offer in California and 31 additional states, according to a company release.
"We believe the suspension of our individual long-term care products in California, pending approval of our new product … is appropriate in light of the return profiles on both the California Choice and Choice Partnership products,” said Pat Kelleher, Genworth president and chief executive officer, in a news release. “It is important that the products we offer are priced to balance the needs of our consumers with our desire to achieve long-term profitability."
A new law tying LTCi rate increases to claims experience went into effect in California on Jan. 1. Under that law, the basis for a rate increase must be considered across all LTCi policies written by the insurance carrier in the state, and not tied to a specific group of policies.
Genworth Life Insurance is a unit of Richmond, Va.-based Genworth Financial Inc.
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