The Event
On Feb 19, 2021, the Conn. Dept. of Insurance approved a 25% rate increase for a subset of (3) Brighthouse policy forms (PF). The approval was half of the 50% requested. On the surface, this appears routine – a carrier asks more, gets less. We have covered Brighthouse (BHF) extensively since it is emblematic of legacy LTCI Industry core issues. It is our Whipping Boy because it is so far off-the-range and makes a terrific case study for what is wrong with legacy LTCI.
The problem
In Dec. 2019, the carrier actuaries made the case that all its 13 books were really the same thus justified a pooled filing. In the filing, all books were subject to a startling +173% rate increase. Do the math. The actuaries are suggesting in the aggregate 13 PFs were priced at 37% of their fair value.
CT DOI rejected that filing since LTC4 had a few months earlier received a rate increase. Later, the pooled-filing was subsequently forked into two separate pooled filings, LTC4 (3 PFs) and pre-LTC4 (10 PFs).
The filing just now adjudicated was for LTC4. Two months ago, pre-LTC4 received a 50% increase based on an asked for +173%. The actuaries must have thought that in asking for a 50%, this submission would be a layup.
On a segregated basis, our metrics show LTC4 is clearly a worse performer in terms of loss ratio than pre-LTC4. LTC4 increases should be larger than pre-LTC4. The more than 4,000 pre-LTC4 policyholders have been had. Oh well, what’s new!?
We believe the ruling was politically motivated, not actuarially justified, a term automatically thrown out against any consumer objections. This is potential welcoming news for all LTCI consumers. This case may have set a precedent to doom the phrase actuarial justification as a regulatory argument.
The Political Action relates to an organized effort by an angry CT consumer mob. One can read about this in the rate filing final disposition. But there is more to the story. Later.