On January 11, the NAIC picked its “letter committee” leadership for 2021 – Chairs and Vice-chairs of the broad committees in charge of policy-making for sub-sectors of the industry or particular areas of regulation. Among the new assignments, North Dakota’s Jon Godfread will now chair the health-focused “B” committee, Oklahoma’s Glen Mulready will vice-chair the life and annuity-focused “A” committee, and Colorado’s Michael Conway will vice-chair the “E” committee, focused on financial regulation. A list of all the NAIC letter committee leadership assignments is linked here.
Long-Term Care Insurance Market Updates
We write on a few articles from the past week that we found interesting.
A recent article from Susan K. Neely, President and CEO of the American Council of Life Insurers, “Helping Older Americans Stay in Their Homes,” looks at challenges facing the long-term care insurance market as COVID-19 concerns continue and more and more people consider long-term care their greatest financial concern behind retirement savings. She also discusses how lawmakers are looking for ways to help more people get long-term care insurance.
Read the full ACLI IMPACT article.
In addition, we want to bring your attention to a new Best’s Market Segment Report, “U.S. Long-Term Care Product Performance Pressures Continue.” According to the report, from credit reporting agency AM Best, loss ratios in the LTCi market continue to climb and “poor performance from inadequate pricing is a significant issue for LTC insurers, owing to low interest rates, lapse rates, improving mortality, rising morbidity and policyholder utilization assumptions.”
The Report also looks more closely at certain factors driving rate increases nationwide, the evolution of combo products to meet growing coverage demand and efforts of the National Association of Insurance Commissioners to stabilize the LTCi market. Although, “AM Best views this as a very difficult task given the state-by-state insurance regulatory structures in place, and expects continued use of closed blocks to separate the legacy liabilities from the new ones in order to increase transparency to outside users of financial statements. AM Best also expects LTC insurers to trend toward simplified policy design and fewer assumptions embedded in their policies. Along with carriers slowing down on offering lifetime benefits coverage and inflation-adjusted features, insurers may also soon begin to disregard lapse rates as an underlying assumption for product pricing.”
Read Best’s Market Segment Report. (Subscription Required).
Finally, in “How low interest rates are changing LTC Insurance products,” Tom Rieske, Jr., Managing Director of LTCi Partners, discusses historical trends in LTCi sales (i.e., the trend toward sales of hybrid life and LTC insurance products) and recent reactions to the persisting low-interest rate environment (e.g., development of a hybrid IUL policy with LTC coverage).
Read the full LTCi Partners article.
Long-Term Care Insurance Fraud, Waste, and Abuse: A discussion with Karen Smyth and Jeff Ferrand
Industry stalwarts Karen Smyth (Vice President of Long Term Care Operations at Wilton Re) and Jeff Ferrand (Vice President of Fraud Services at LTCG) have significant experience developing and implementing anti-fraud, waste, and abuse programs at the carrier and TPA level.
Please listen to the below podcast with Chris Petillo and Jessica Loesing as they discuss Karen’s and Jeff’s views on, among other questions, how fraud, waste, and abuse manifest in the LTCi space, and potential efforts carriers and TPAs can use to prevent and detect fraud, waste, and abuse. Karen also shares her experience as a witness in a criminal trial involving LTCi insurance fraud and Jeff shares his past experience as outside counsel prosecuting insurance fraud cases. Finally, stick around to hear some of the creative and industrious ways Karen and Jeff have been passing the time with their families (at home) during the pandemic.
Considerations When Buying Long-Term Care Insurance
We are linking to another piece highlighting the attractiveness to many consumers of hybrid long-term care products in contrast to stand-alone long-term care insurance. This recent Barron’s article, “Not Everyone Needs to Buy Long-Term Care Insurance. Here Are Some Considerations,” explores some of the considerations when consumers are looking to buy long-term care insurance, including premium costs, benefits payouts and availability of more policy options.
Continue reading “Considerations When Buying Long-Term Care Insurance”
What Insurers Need to Know About the Elections
2020 is an unusual election year, with many high-level outcomes still undetermined weeks after the polls closed. Despite this uncertainty, insurance industry stakeholders need to look ahead to the future. Thought leaders from Faegre Drinker’s insurance team participated in a post-election roundtable — and have helpful insights to share as we head into 2021.
Continue reading “What Insurers Need to Know About the Elections”
Alaska Orders Long-Term Care Insurers to Temporarily Suspend Enforcement of Family Member Exclusions
The Alaska Division of Insurance recently ordered long-term care insurers to suspend enforcement of family member exclusions until December 15, 2020, or until such time that Governor Mike Dunleavy determines that the declared public health disaster emergency resulting from COVID-19 no longer exists. See Order R20-10 (November 16, 2020). In the Order, the Division expresses its determination that insureds be able to access their benefits notwithstanding family member policy exclusions due to the increased risk of exposure attendant to home health care providers traveling between households. The Division has extended similar orders during the pandemic, so this Order may be extended beyond December 15. Although the industry has become accustomed to COVID-19-related accommodations pursuant to orders from state regulators, the Division’s decision to suspend family member exclusions is a first during the COVID-19 pandemic and may present administrative and compliance challenges.
NAIC Anti-Rebating Model Language
The NAIC Innovation and Technology (EX) Task Force met on November 4 to discuss proposed changes to the anti-rebating language in the NAIC’s Model Unfair Trade Practices Act (MDL-880). Drafting leaders used the meeting as an opportunity to address comments received in response to the August 10 draft, including comments from the American Council of Life Insurers (ACLI). The final comment period is open now through Wednesday, November 18, after which a final version of the amendment will be made available. The Task Force hopes to vote to adopt the final draft at the December 4 meeting.
SHIP Rehabilitation Plan Amended
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.