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Florida is latest state to plan LTC hearing in response to large rate increase requests

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Florida is latest state to plan LTC hearing in response to large rate increase requests

Two recentfilings in a long-term care business line where rate increases have become commonplaceserve as the trigger for another state insurance regulator to convene a public hearingon the topic.

FloridaInsurance Commissioner David Altmaier said the state's Office of Insurance Regulationwould hold separate public hearings Aug. 12 to specifically discuss a series ofrate increases requested by MetropolitanLife Insurance Co. and UnumLife Insurance Co. of America. The announcement follows public hearingswith a broader focus and agenda that had been held earlier this year by regulatorsin Maine and .

FLOIRregularly held public hearings about specific rate increases filed by private propertyinsurers in the earlier part of the current decade and the latter part of the previousdecade. Altmaier's predecessor as commissioner, Kevin McCarty, held wider-rangingpublic hearings in October 2005 on what the office described at the time as "theneed for protection against skyrocketing Long-Term Care costs" and "significantproblems" within the private long-term care market that included "skyrocketingrate increases."

The needfor rate increases has only accelerated since then as interest rates have declinedand results deteriorated, leading a number of carriers, including and Unum Group, to stop writing new long-term care business.

The announcementof the August event included a list of average statewide rate increases requestedby Metropolitan Life of between 20.1% and 95.4% on six separate policy forms. Italso referenced a filing by Unum Life that included anywhere from no requested rateincrease to an average increase of 114% for certain policies with compound uncappedinflation coverage, depending on the particular policy form.

A reviewof FLOIR records shows the Metropolitan Life filing as having been submitted May5. The Unum Life filing was initially filed April 15.

UnumLife, in its rate filing, said it "recognizes the impact that pricing increasescan have on individuals," and it offered several options to policyholders tomitigate those hikes. Metropolitan Life also outlined various options in its filingfor affected policyholders to consider, and the company said the decision to pursuethe rate increase was one that it had not taken lightly.

FLOIRobserved in announcing the hearings that long-term care premiums have been rising"dramatically" as a result of "incorrect assumptions regarding howmany people would decide to cancel their coverage, the number of policyholders withcognitive issues such as Alzheimer's, and longer life expectancy." The regulatorsaid that it "closely monitors the financial health of the long-term care insurancemarket and strives to strike a balance between financial stability of the insurersand the cost to consumers."

The releaseannouncing the public hearing made mention of the 2015 net income and year-end surpluslevels of both Metropolitan Life Insurance Co. and Unum Life. It separately characterizedeach company as being "one of the largest" writers of long-term care businessin Florida.

UnumGroup President and CEO Richard McKenney, speaking during an in June, said his companyhas achieved its expectations for long-term care rate increases to that point. "But,"he added, "it's something we are going to stay at for a longer period of time."

Companyofficials previously reported an improving regulatory environment for rate increases.

"Moreand more the states that aren't allowing rate increases are becoming the outliers,as opposed to the states that are," Executive Vice President and CFO John McGarrysaid during Unum Group's April earnings conferencecall. "So, we feel good about where we are, we feel good aboutour assumptions and we feel good about rate increase prospects going forward."

Based on disclosures of direct premiums written on the InterstateCompact section of Schedule T in 2015 annual statements, the MetLife and Unum groupsranked third and fifth, respectively, in the Florida long-term care market. and ranked No.1 and No. 2 in Florida and across the U.S.