Senior Health Insurance Company of Pennsylvania (“SHIP”) was placed in rehabilitation in Pennsylvania in January 2020. On August 24, 2021, the Commonwealth Court of Pennsylvania approved the Rehabilitation Plan (the “Plan”), which includes a nationwide premium increase and several benefit modification options that will be presented to policyholders to avoid or mitigate the rate increase. The Plan includes an opt-out for state regulators who elect to review the proposed rate increase, but if an opt-out state does not approve the full rate increase the options available to policyholders of policies issued in that state would not include an option for the policyholder to retain the full benefit amounts set forth in their policy. Because of the novel strategy to pursue a rate increase/benefit modification through the rehabilitation court, the Plan has proven to be controversial. For example, the chief insurance regulators in Massachusetts, Maine and Washington have filed an appeal in the Supreme Court of Pennsylvania to challenge and block the Plan (and a group of 27 other state insurance regulators filed an amicus brief in support of this challenge). The Pennsylvania Supreme Court recently denied an application for a stay of the approval of the Plan while the appeal is pending.
Author: Editorial Board
COVID-19 Driving Insurance Sales Over the Past Year
It should come as no surprise that the COVID-19 pandemic has been one of the biggest, if not the biggest factors driving the insurance market over the last year and a half.
More than half (54%) of Americans said that COVID-19 has made them more anxious about dying early, becoming disabled or needing long-term care (LTC), according to a new survey from the Million Dollar Round Table (MDRT).* Among those surveyed who said they acquired new insurance policies since March 2020, 42% said the COVID-19 pandemic was a factor while other reasons included wanting to provide for their family (36%), a major life event (29%) and new concerns about potential future disability or LTC needs (27%).
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Long-Term Care Insurance Policy Sales Declined in 2020
The number of people who purchased traditional long-term care insurance policies last year dropped significantly compared to previous years, based on new figures released by the American Association for Long-Term Care Insurance (AALTCI).
AALTCI reports that at its peak in 2000-2001, sales of traditional LTCi policies soared to more than 700,000. Numbers have fallen over the last two decades and hit their lowest point in 2020 with just 49,000 policies sold. AALTCI says while the need for LTCi hasn’t changed, “more people are opting for a linked-benefit product such as a life insurance policy that can also pay long-term care benefits.”
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Interest in Hybrid Life-LTC Products Increases Due in Part to COVID-19 Pandemic
The pandemic shifted the way a lot of Americans view long-term care and insurance according to a new LIMRA survey.* LIMRA says more than a quarter (26%) of the people it surveyed say they are “extremely or very likely” to consider a combination/hybrid life product when shopping for insurance (a life policy with an LTCi component). In 2019, that number was just 17%. More than a third (36%) said they were “somewhat likely” to consider it.
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Liability Insurance Rates and Reduced Capacity Add Pressure to the Cost of Long-Term Care Services
The cost of long-term care services continued to rise during the pandemic, and many care providers expect their clients’ costs to increase significantly in 2021.1 A new Willis Towers Watson Insurance Marketplace Realities 2021 Spring Update (“Spring Update”) concludes that 2021 will continue to squeeze long-term and senior care providers from both sides—with general and professional liability insurance rates predicted to increase by 30% or more, and a persistence of 2020’s overall reduced liability capacities in the market for the long-term care provider sector.
2021 Virtual ILTCI Conference Wrap Up
The 2021 virtual Intercompany Long-Term Care Insurance Conference Association (ILTCI) wrapped up this week after three weeks and 48 sessions dedicated to the LTCi industry. The conference, the largest multidisciplinary long-term care conference in the U.S. included weekly Tuesday and Thursday sessions from April 13-29.
2021 ILTCI Conference
Faegre Drinker is a proud sponsor of the upcoming Intercompany Long-Term Care Insurance Conference Association (ILTCI) virtual event. The conference, the largest multidisciplinary long-term care conference in the U.S., kicks off Tuesday, April 13 with a general session followed by sessions every Tuesday and Thursday through April 29.
Several of our insurance professionals, along with many other LTCi community insiders, will be speaking this year on topics ranging from litigation, to aging in place, to rate increase innovations. Here is a brief look at the panels we will be joining:
New Hampshire Supreme Court Strikes Down Long-Term Care Insurance Premium Rate Increase Caps
The New Hampshire Supreme Court recently ruled that New Hampshire’s regulation that places certain caps on long-term care insurance premium rate increases exceeds the Insurance Commissioner’s rulemaking authority and, therefore, is invalid. See Genworth Life Ins. Co. v. New Hampshire Dep’t of Ins., No. 2019-0727, 2021 WL 621005 (N.H. Feb. 17, 2021).
Some states, either by regulation or administrative practice, place caps on long-term care insurance premium rate increases. In 2015, New Hampshire promulgated amended long-term care insurance regulations that capped premium rate increases based on an insured’s attained age and applied the new caps retroactively to all long-term care insurance policies issued in the state (Amended Regulations). See generally N.H. Code Admin. R. § 19. As drafted, the regulation did not afford the Commissioner discretion to approve increases that exceed the caps. The rate caps were implemented on a sliding scale from 50 percent for all policyholders with attained ages 70 and below down to 10% for policyholders with attained ages over 90. As with caps implemented by other states, the caps adopted by New Hampshire had no actuarial basis.