During the National Association of Insurance Commissioners (NAIC) Spring Conference last week, the NAIC LTC Task Force met to discuss various topics and we wanted to share a summary of the discussion:
The bulk of the meeting was the Task Force receiving an update from each of its subgroups:
- The Multistate Rate Review Subgroup has completed the first draft of the MSA Framework, focused on the operational aspects, and exposed it for comment until May 24. The remaining sections – actuarial, non-actuarial, and RBO – are still in progress and expected to be exposed by June 1.
- Former regulatory Ted Nickel asked how states can participate in the MSA review if they do not have the resources for actuarial staff and instead use a third-party consultant for rate reviews. Rhonda Ahrens (NE) suggested that is a good area to seek specific comments on during the exposure period. Fred Andersen (MN) emphasized that while the core team is 5-7 people, it is intended to be an open process involving all the states and welcomed comments on how to address state consultants that may be left out of the process.
- The Long-Term Care Insurance Reduced Benefit Options Subgroup’s 2021 charges include further evaluation and recommendation of options to help consumers manage the impact of rate increases, and providing support and expertise to the Multistate Rate Review Subgroup regarding the evaluation of RBOs. Jessica Altman (RBO Subgroup Chair – PA) said the subgroup will hold a public call in early May to hear from industry and other stakeholders about current innovative pilot programs. The subgroup is also revisiting and will potentially add to the checklist document which will involve additional public conversations.
- Bonnie Burns (Consumer Representative) asked about a recent issue of policyholders subject to a class action settlement receiving rate increase notices before receiving their settlement notice, which lists differing options and resulted in consumer confusion. Altman suggested the issue be raised at the next public RBO subgroup meeting but believes it to be a unique issue.
- The Long-Term Care Insurance Financial Solvency Subgroup hasn’t met recently. However, through the work of the Valuation Analysis Working Group (VAWG) and reviews of the AG 51 analysis, industry trends that could have an impact on the solvency of insurance companies have been identified. In the past decade consistent factors impacting reserve levels have been observed: lower lapses, lower mortality, longer duration claims caused by higher rates of Alzheimer’s and dementia, and market rates. Some areas of uncertainty identified were observations/expectations that aging at home initiatives and technological advances will lead to healthier and safer environments for seniors and therefore lower claims and lower morbidity incidents in the future. Fred Andersen pointed to the low interest rate environment and uncertainty in how future premiums and bonds will be impacted/perform in the future. He also indicated that there has been coordination between VAWG, FAWG, and domestic regulators on this topic.
During the “Other Matters” discussion at the end of the meeting, Commissioner Scott White (Chair – VA) discussed the LTCi legal restructuring and a related initiative that was referred to the Restructuring Mechanisms Working Group to consider the legal applications of restructuring since there have been regulator concerns about LTC insurers seeking to separate blocks of business. He also noted that regulators continue to work on getting the LTC data call results into a report suitable for public viewing.
Birny Birnbaum (CEJ) expressed frustration with the lack of transparency among the Task Force and subgroups, calling out the various regulator only discussions but few public meetings. Commissioner White explained that because of the lack of consensus among state regulators regarding LTC issues, having candid discussions in closed sessions has helped the group progress more quickly than it otherwise would have. He anticipates more public involvement soon.
Here is additional information on the NAIC LTC Task Force and the Spring NAIC Meeting.
We will continue to bring you regular updates on the NAIC and the LTC Task Force throughout the year.