CMFG Life Insurance Company – Individual (2002-2009)
Rate request: 150.0 percent (16.5% each year for 6 years)
Decision: Limited to 16.5% for 3 years
On September 15, 2020, CMFG Life Insurance Company requested a cumulative increase of 150 percent over six years for its “2002 Product” individual long-term care policies.
The policies were sold in Connecticut from 2002 to 2009 and are no longer being marketed. There are approximately 645 policies currently in effect in the state.
The company said it sought the increase because current estimates of lifetime loss ratios are in excess of expected. They proposed to implement the increase with a 16.5% increase every year for six years, resulting in a cumulative increase of 150%.
After Actuarial review, the Department disapproved the requested increase but limited it to 16.5% a year for 3 years on January 5, 2021. This is the equivalent of a one-time 51.4% increase. While the total historical experience is close to anticipated levels, most of the claims are expected in the future and the recent experience has deteriorated with projected lifetime loss ratios far exceeding minimum required levels.
Unlike medical health insurance with premiums set to cover expenses incurred only during the upcoming policy year, long term care premiums are set to cover expenses that are not expected to occur until a distant date, sometimes 20 years in the future.
The company said its policyholders will have options to change or reduce benefits in order to mitigate the impact of an increase. The new rates will be implemented in a timely fashion, in accordance with Connecticut requirements. Under state law, rate increases of 20 percent or more must be implemented over three years or more.
Find the filing documents here at Long-Term Care Insurance Rate Filing