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LTC rate increases continue as regulators mull creation of run-off facility

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LTC rate increases continue as regulators mull creation of run-off facility

As state insurance regulators contemplate a proposal to create separate long-term care insurance facilities, one impaired and the other solvent, regulators continue to accept rate increases for insurers' in-force policies.

The run-off proposal is one of a number of options insurance commissioners are considering to address the industry's long-term care problems, Peter Gallanis, head of the National Association of Life & Health Guaranty Associations, said Aug. 6 during the National Association of Insurance Commissioners summer meeting in Philadelphia.

"Until you have addressed the issue of funding sources, you have not solved this problem," Gallanis said.

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Regulators approved rate hikes on 133 filings for qualified long-term care insurance policies, with a renewal business effective date during the second quarter of 2017. John Hancock Life Insurance Co. (USA), which exited the individual long-term care market in November 2016, had the biggest calculated premium change of $16.6 million, based on an analysis by S&P Global Market Intelligence.

The bulk of the increase for John Hancock occurred in Connecticut, as regulators approved a 60.8% hike for an additional $15.6 million in calculated premiums. Although the insurance company may not receive the full impact of the increase, the calculated premium change provides a rough estimate of what it may receive.

For the first time, SILAC LLC landed in the analysis after it acquired Equitable Life & Casualty Insurance Co. during the quarter. Equitable Life is seeking an additional $1.8 million of premiums spread across 1,525 policyholders.

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AEGON NV subsidiary Transamerica Life Insurance Co. was granted premium increases in three states during the second quarter. Most notably, regulators in Wisconsin granted a 90.0% rise in rate for an additional bump in premium of $9.2 million, while the $3.5 million increase in Pennsylvania will impact 1,867 policyholders.

The insurance department in Texas approved a rate change of 160.3% for Prudential Insurance Co. of America, which will potentially add $2.6 million in premiums for the insurer.

Wisconsin saw the highest weighted-average increase in LTC rates, at 81.8%. South Carolina and Oklahoma saw the highest number of filings, at nine, for an increase of 16.8% and 7.8% respectively.

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S&P Global Market Intelligence offers a variety of tools to analyze the rate and product filings of insurance companies.

Click here for a webinar with information on the resources S&P Global Market Intelligence has available regarding rate filings.