Senior Health Insurance Company of Pennsylvania (“SHIP”) was placed in rehabilitation in Pennsylvania in January. As required by the Order of Rehabilitation, the Rehabilitator filed a Proposed Plan of Rehabilitation (the “Plan”) in April.1 Several interested parties, including three state insurance regulators, intervened in the rehabilitation proceedings in the Commonwealth Court of Pennsylvania (the “Court”). Other interested parties filed formal comments with the Court, generally expressing concerns about or opposition to the Plan. On October 21, the Rehabilitator filed an Amended Plan of Rehabilitation (the “Amended Plan”). When filing the Amended Plan, the Rehabilitator stated that it “addresses most or all of the material and substantial concerns raised in response to the initial Proposed Plan.”
The core of the Plan is charging policyholders the “If Knew Premium” for the benefits under their policies. The If Knew Premium is the rate that, if charged since inception, would have produced the greater of the initial target loss ratio or the minimum loss ratio applicable to the policy form. Policyholders would be offered options to increase premiums or reduce benefits so that they are paying the If Knew Premium for the benefits provided. Many objections to the Plan asserted that the Rehabilitator does not have the authority to implement rate increases without seeking approval from state insurance regulators. Under the Plan as originally filed, no such approval was contemplated.