A group of CT LTCI Consumer activists learned that when the term solvency is put forth by regulators, in this case the CT Dept. of Insurance (DOI), it refers to an entire insurance company, including multiline companies who might offer life insurance, annuities, property & casualty, other lines. On Wednesday, Oct. 16th 2019, a public forum was held to discuss this and other related LTCI topics. Stakeholders who appeared were legislators, policyholders, reporters, agent / brokers, and consumer activists.
Key points from the presenters:
- The LTCI industry is on shaky ground. One company (Penn Treaty) has already been declared insolvent and presenter(s) said that several unnamed others are on a watch list. Should I worry if I have my annuity with a company having a large exposure to LTCI?
- What happens when a company does go insolvent and the effect on policyholders, other insurers who are charged an assessment, and potentially the taxpayer.
- LTCI insurers need large rate increases to remain solvent due to what their models tell them about future claims projections.
- The DOI is available to explain to policyholders what some of their options are in addition to paying the increased premiums or reduced coverage, particularly as it relates to non-forfeiture (i.e. lapse policy, but retain benefits). It was suggested that policyholders work with their advisors, including those that sold them the product.
- Some states allow for a multiline parent company to spin-off their LTCI division such that other lines-of-businesses are protected (as well as shareholders) while the spun-off company “twists in the wind” (policyholders).
- NAIC task force will be looking for constructive, compromised solutions in 2020 that might be favorable to both policyholders and carriers.
On the last point, “don’t hold your breathe”! It is to states’ discretion what they chose to implement from NAIC proposals.
As a participating member of this forum, I found the format too one-way, stifling, and orchestrated without input from the Consumer side. This forum was heavily weighted with discussion about solvency without consideration of possible remedies that would protect consumers’ interests.
As an attendee, I couldn’t help wonder, “where have state regulatory agencies and NAIC been all these (30) years to allow the LTCI industry get into such a condition”?