Insurance and Real Estate Committee

JOINT FAVORABLE REPORT

Bill No.:

SB-199

Title:

AN ACT CONCERNING LONG-TERM CARE INSURANCE PREMIUM RATE INCREASES.

Vote Date:

3/6/2014

Vote Action:

Joint Favorable

PH Date:

2/25/2014

File No.:

SPONSORS OF BILL:

Insurance and Real Estate Committee

REASONS FOR BILL:

This bill is set to reduce the burden that a profoundly high rate increase has on a policy holder. The consumer will be able to spread the effects of the approved filing over a few years, reducing the financial shock of the legitimate and necessary rate increase, while the process will not be subjected to non-productive input, and unnecessary delays and costs.

RESPONSE FROM ADMINISTRATION/AGENCY:

State of Connecticut Insurance Department, testified in support of the bill, stating how they are mindful that the cost of long term care health insurance, in both the individual and group market, is significant for insured policyholders and certificate holders, many of whom are senior citizens with fixed incomes. They are sympathetic to consumers trying to meet these rising costs, especially in these economic times. The department also recognizes how this is not a solution to the underlying issue of increasing rates occurring all over the country. Although, they hope by requiring the carriers to spread the premium increase over a period of three years, coupled with the requirement that policy holders be given the option to reduce their benefits, policy holders can better plan and adjust to meet these rising costs.

Insurance Association of Connecticut submitted testimony stating how they have urged and continues to believe, that the injection of subjective input into highly complex rate review process would be counterproductive to the best interests of long- term care insurance consumers in this state. The Insurance Association of Connecticut does not believe any legislative change is necessary to the Insurance Department's authority to regulate rates concerning long-term care insurance products. “However, if the determination is made by the Committee that legislation is necessary to address concerns regarding long-term care insurance rate filings, SB 199 presents a more viable regulatory adjustment than other previous legislative proposals.”

NATURE AND SOURCES OF SUPPORT:

Julia Evans Starr, Executive Director of Connecticut's Legislative Commission on Aging submitted testimony stating their support of the bill and the bill's intent. “Senate bill 199 requires that insurance companies that raise long term care insurance premiums on policy holders by more than 20% spread the rate increase out over 3 years or more. In addition the bill requires that insurance companies prior to implementing a rate increase must inform the policy holder of the choice to reduce the policy benefits to reduce the premium rate.” We respectfully would suggest that the threshold that an insurance company must comply with these requirements would be when a premium rate increase exceeds 10% instead of the 20% threshold in this language.”

NATURE AND SOURCES OF OPPOSITION:

None expressed.

Reported by: Ashlee Chatfield

Date: March 14, 2014