Insurance and Real Estate Committee

JOINT FAVORABLE REPORT

Bill No.:

SB-9

Title:

AN ACT REQUIRING CERTAIN DISCLOSURES FOR LONG-TERM CARE INSURANCE POLICIES.

Vote Date:

2/25/2014

Vote Action:

Joint Favorable

PH Date:

2/18/2014

File No.:

SPONSORS OF BILL:

Insurance and Real Estate Committee

REASONS FOR BILL:

This bill requires specific disclosures to be given to applicants who are applying for and purchasing a long-term care policy so that they are aware of potential future premium rate revisions and the policyholder's options in the event of a premium rate revision.

RESPONSE FROM ADMINISTRATION/AGENCY:

Julia Evans Starr, Executive Director, Connecticut's Legislative Commission on Aging is in support of SB 9 and the whole idea of informing Connecticut residents about potential rate increases on long-term care insurance policies. “We have heard from constituents who have received notices of significant premium rate increases on their already high cost policies sometimes upwards of 10% or more, making the policy unaffordable”. “This bill allows for more transparency thru public information and input of policy holders understand the impact of these large premium rate increases and the effect it has on individuals”.

NATURE AND SOURCES OF SUPPORT:

Laurie Julian, Director of Public Policy, The Alzheimer's Association submitted testimony in support of SB 9. They support SB 9 because to an extent these bills increase access to long-term care at reasonable and affordable costs.

NATURE AND SOURCES OF OPPOSITION:

The Insurance Association of Connecticut testified in support of the bill's adoption of Section 9 of the National Association of Insurance Commissioners (NAIC) model regarding disclosures that are required when applicants apply for long term care insurance policies. Other states have already adopted this model and show that it provides consumers with benefits. SB 9 as written deviates away from the actual model and some of the provisions make implementing this difficult. Some of the terms that are dropped and omitted create confusion and create unknown obligations that make implementation difficult. An example would be the provision that exempts certain non-cancellable or paid up policies. The IAC followed up with how the IAC deviates away from “how long-term care products are impacted”. Some of the language in SB 9 that is applicable to the “individual long-term care product into the group product statutory section”. The IAC wishes to amend the bill to better conform with the NAIC's model.

American Council of Life Insurers submitted testimony in opposition on how the bill is currently written but supports the adoption of the NAIC's model on Long-Term Care Model Regulation. Their member companies that offer long-term care insurance support the idea of consumer disclosure. The ACLI wants to amend the bill so that it follows the model more precisely. The bill as written does not have provisions regarding certain exclusions, including blocks of business acquired from another insurer. The ACLI is working with the IAC on this issue and support their (the IAC's) efforts.

Brian Quigley, America's Health Insurance Plans spoke in opposition of SB 9 as written. The idea of making consumers aware of the potential for premium increases on long-term care insurance policies is an interest that they share with the committee. AHIP believes that the committee should adopt the NAIC's Long-Term Care Insurance Model Regulation's Section 9. AHIP states that if this model is adopted then consumers will be made aware of rate increases in the future and also informed on potential future premium rate revisions and what options the insured would have if an increase should happen. The NAIC's Model rate increase consumer disclosure form is what the insured would be given at the time of their initial solicitation and application for long-term care insurance. AHIP wants to incorporate the entire NAIC model language into SB 9.

Reported by: Chris Chinnici

Date: 3/10/14