Long-Term Care Rate Filing - American Progress Life & Health Insurance Company of NY (Individual)
On February 5, 2018, the American Progressive Life & Health Insurance Co. of NY filed for a 100 percent rate increase on a small block of business for its long-term care individual policies. The policies provide coverage for nursing home and home health care. They were issued from 2001-2003 in Connecticut and are no longer being marketed in the state. There are 10 of these policies currently in force in Connecticut.
The company says it is seeking the increase because actual claims costs far exceeded projected costs that were calculated when the product was originally priced.
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.
After an actuarial review, the Department determined that while the Connecticut block of business may be too small to be credible, the claims experience is performing far worse than expected and will likely continue to deteriorate. American Progressive has already exceeded the statutory minimum of 60 percent loss ratio, meaning it must spend at least 60 cents of every premium dollar on benefits over the life of the policy. The company is actually spending over 70 cents of every premium dollar on benefits. As a result, the Department disapproved the initial rate increase request, but limited it to a 40 percent increase to be implemented over three years per state law.
The company said policyholders will be given the option to offset the increase and lower their premium by reducing their current benefits.