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State Protections Lay Foundation for Long-Term Care Proposal

Source: NAIC

Posted on 19 Oct 2009

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Testifying last week before a joint U.S. Senate committee hearing, the National Association of Insurance Commissioners (NAIC) highlighted how existing state regulatory protections could apply to the Federal Long-Term Care Insurance Program.

Adopted in 2000, the NAIC Model Regulation is designed to provide extensive consumer protections to long-term care policyholders by requiring insurance companies to provide disclosures of past rate histories and potential for future increases to allow consumers to make informed decisions.

"State regulators have worked to protect consumers by enacting protections designed to keep abreast of the changes in product design and to address problems encountered in the long-term care marketplace," Florida Deputy Insurance Commissioner Mary Beth Senkewicz testified on behalf of the NAIC. These consumer protections include NAIC models that have been adopted to assist states in developing a regulatory structure for the oversight of long-term care insurance, including the rate stabilization provision.

"Although companies need to charge sufficient premiums to remain solvent and pay claims, state regulators believe that consumers must be treated fairly in the pricing of these policies," said Senkewicz. "Insurers must charge consumers a reasonable initial rate to limit potential future increases and ensure rate stability."

Senkewicz added that a healthy long-term care insurance market helps alleviate pressure on state and federal programs. Private long-term care policies cover ten percent of the nation's long-term services in a market that has grown from three million to more than seven million consumers with growth in annual premium volume over the past decade increasing from $16 billion to more than $110 billion.

State regulators have made numerous improvements to the models to address the unique challenges in this market including suitability, loss ratio requirements, consumer disclosures and other critical consumer protections. Additionally, the NAIC recently adopted new external review standards for claims denials that will be an important new consumer protection.