Long-Term Care Rate Filing - Continental Casualty Company (Individual)
On November 20, 2017, Continental Casualty Co. requested an average increase of 33.1 percent for its individual long-term care policies.
The policies were sold in Connecticut beginning in the early 1990s and are no longer being marketed. There are approximately 1,200 policies currently in effect in the state.
The company said it sought the increase because the original pricing does not support the higher than projected benefit costs that would be required over the life of these policies.
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 this block of business is performing worse than expected. In fact, the company has exceeded the statutory loss ratio of 60 percent, meaning the company must spend at least 60 cents of every $1 of premium on benefits. With no rate adjustment, the company is expected to spend as much as $1.60 for every premium dollar it takes in. As a result, the Department approved the rate increase request on February 23, 2018.
The new rates will be implemented 60 days after the company notifies customers. Continental Casualty stated it would offer its customers a variety of options to change or reduce benefits in order to mitigate the impact of a rate increase.
Under state law, rate increases of 20 percent or higher must be phased in over three years.