Insurance and Real Estate Committee
JOINT FAVORABLE REPORT
Bill No.: SB-1046
Title: AN ACT CONCERNING LONG-TERM CARE INSURANCE.
Vote Date: 3/22/2021
Vote Action: Joint Favorable
PH Date: 3/18/2021
File No.:
Disclaimer: The following JOINT FAVORABLE Report is prepared for the benefit of the
members of the General Assembly, solely for purposes of information, summarization and
explanation and does not represent the intent of the General Assembly or either chamber
thereof for any purpose.
SPONSORS OF BILL:
Insurance and Real Estate Committee
REASONS FOR BILL:
Long-term care premiums have increased substantially causing Connecticut residents to pay
increased premiums or cancel their policy. This bill would require the Insurance
Commissioner to develop a minimum set of affordable benefit options for long-term care
policies and provide that no insurance company issue, renew, continue or amend such
policies in the State of Connecticut. This bill would also authorize the Attorney General to
investigate rate filing referred to their office from the Department of Insurance and take action
to protect and secure compensation for the insured under the long-term care policy that is
subject of rate filing.
RESPONSE FROM ADMINISTRATION/AGENCY:
William Tong, State of CT Attorney General written testimony is limited to Section 5 of the
bill, which would give the Attorney General the authority to investigate, in consultation with
the Insurance Commissioner, long-term care policies subject to rate filings with the
Connecticut Insurance Department. Additionally, Section 5 would allow the Attorney General
to bring a civil action to recover damages on behalf of an insured. While we are supportive of
the effort to ensure transparency in rate filings, we would submit that Section 5 is
unnecessary and urge the Committee to strike Section 5 from this bill. Under current law,
specifically the Uniform Administrative Procedures Act, the Insurance Commissioner already
has full investigatory authority and broad discretion to impose significant orders, including
civil penalties and license revocation for fraudulent acts by insurers. Our Offices role is to
enforce the Commissioners administrative orders through the courts and to defend the
Commissioners administrative orders in court, should they be appealed. This bill seeks to
directly involve our Office in both investigations and the pursuit of sanctions. While an
investigation by our Office and a civil action may give the impression of heightened
enforcement, it may actually serve to diminish the states ability to hold insurers liable for their
fraud. Creation of a redundant and parallel investigation and civil prosecution would be less
streamlined and could possibly lead to differential treatment under the law, thus creating
unnecessary exposure to the state.
NATURE AND SOURCES OF SUPPORT:
Mike Klein, AARP Volunteer Advocate stated after a personal and family hardship he
purchased long term care insurance. It was a three year benefit coverage with a yearly
premium of $3,268. He received notification that the insurance company asked the CT
Insurance Commission for a 16% rate increase but receive a 15% increase. Each year after
he had several increases.
Soon after they have said that when they started selling these policies years ago, they didn't
calculate that people would live longer, be healthier, or that the price of care will go up and
up. I am stuck between a rock and a hard place. At the age of almost 74, if I look for a new
LTC policy, the prices of premiums are ridiculous, yet my current policy is unaffordable if the
premium keeps going up. I, like many others seeing these continued rate increases, might
have to drop our long-term care insurance.
Bob Rodman, AARP Volunteer stated he had many annual premium increases. As a senior
citizen he truly believes seniors should have the option to remain at home and live
independently for as long as they choose.
Lori Suzik feels Connecticut taxpayers will foot the bill, for LTC , for every senior that
relinquishes their policies , due to unaffordable, unsustainable rate increases. The insurance
lobby is strong in CT. Connecticut is the insurance capital. I believe this is part of the reason
these LTC rate increases have been allowed to victimize senior citizens. Last year no LTC
reform bill was passed to help seniors. I support SB1046. If possible I would request stronger
language to lower allowable rate increases to no more than the 2-3% cost of living increase.
A 3 year moratorium on increases would be welcome. These measures are necessary to help
CT seniors keep their LTC policies, many policies which were promoted through the
Connecticut Partnership Program and purchased in good faith by CT Senior citizens.
Terry Williams submitted testimony that the State of CT Insurance Department lists the
latest forty-one long-term care rate filings and their decisions about them. Insurance company
rate request increases for 2020 were mostly double and triple digit. For example, Lincoln
National Life Insurance requested a 30% increase and was approved for that amount. John
Hancock requested a 68.3% average increase and was approved for a 10-15% increase.
Finally, Brighthouse requested a 173% hike and received a 50% increase. In short, the
companies highballed their requests and still received a draconian hike for their efforts.
Its time for legislators to have compassion for the folks who voted them into office in the first
place. Its time for the DOI to do something different or think outside the box for a change.
If not, their greatest fearbloated Medicaid rolls will become a reality and there will be
nobody but themselves to blame.
Robert Schoengerber testified we need this bill to provide relief to seniors regarding LTC
policy rate increases. 100,000 senior citizens bought LTC1 policies in CT and do not have a
voice today. I am advocating for myself, my wife and all those seniors who were unable to
participate today. Lets write a bill that will allow seniors to keep their LTC policies. This will
protect seniors LTC needs and save taxpayers pocket books. Remember, the state of CT
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promoted many of these LTC1 policies, so the state should assume responsibility to correct
the problem.
NATURE AND SOURCES OF OPPOSITION:
Eric George, President , Insurance Association of CT offered comments on the bill, which
would impose certain limits on long-term care insurance carrier.
We understand and appreciate the desire to lessen the shock of legitimate and necessary
rate increases in LTC insurance policies. However, SB 1046 imposes an arbitrary limitation
on issuing insurance, one that will harm both insurers and consumers in the long run.
He feels that lines 197-199 will jeopardize the solvency of insurers, a necessary condition to
maintain the structure of LTC insurance. In order to pay LTC benefits and ensure adequate
funding for claims, insurers require the flexibility to adjust premium rates when actuarily
justified. Rate-setting and actuarial analysis is a complex process,and prohibiting insurers
from filing a rate increase during the period in which a previous rate increase is spread will
disrupt that process.
As dictated by actuarial analysis and in order to maintain consistency in rate setting, insurers
frequently file during these periods and also attempt to do so at their conclusion. In 2014,
Connecticut enacted PA 14-10, which required that insurers must spread LTC insurance
premium rate increases of 20% or more over at least three years.
The proposed legislation will disincentivize insurers from filing for a predictable rate increase
of greater than twenty percent spread out over three or more years. Insurers may instead be
pressured to implement smaller, short-term premium rate increases, a change that could
increase costs and uncertainty for both insurers and consumers. The injection of subjective
input into this highly complex rate and review process is counterproductive to the best
interests of LTC insurance consumers.
Camille Simpson, Regional Vice President, ACLI recognize the facial appeal of avoiding
mono-line LTC companies, given their history to date, it is not prudent or in consumers best
interest to forever bar mono-line companies from the LTC marketplace. In addition, for
insurance companies, there is not a specific license to write the LTC line of insurance (see
the attached list of Life and A&H line of business licenses from the NAIC Uniform Certificate
of Authority Applications page). Insurer licenses are at a higher level than a particular product
type, so if an insurer is licensed in Connecticut, it can write any product within that line of
business. Concerns regarding solvency issues are already addressed by the Connecticut
Insurance Department, which has the regulatory authority and ability to assess financial
strength of domestic companies and companies doing business in the state. Recent
developments such as Actuarial Guideline 51 - The Application of Asset Adequacy Testing to
Long-Term Care Insurance Reserves provide regulators information to assess the reserve
adequacy companies. In addition, this requirement would not address potential solvency
concerns since the specific other lines of business a company must sell and whether that
business is or is not profitable are not addressed. The requirement raises legal and
constitutional concerns about mandating the type and volume of business a company must
sell. If the intent is that an insurer must be licensed in more than one broad line of business
(i.e., Life plus A&H; or A&H plus P&C, etc.) the same legal and constitutional concerns apply.
Finally, once issued, tax-qualified LTC business is guaranteed renewable, so any company
with in-force business MUST renew its in force block if the insured continued to pay the
required premium. This licensing requirement could not trump those in-force contract
obligation.
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Joan and Milton Wallack feel that the solution for increasing premium rates for LTC should
be strong and we therefore recommend a COL consideration which we feel is more than
adequate and very reasonable. In addition, because of previous excessive increases, we also
suggest that consideration be given to premium abatements to make up for previous flagrant
increases.
Reported by: Diane Kubeck Date: April 1, 2021
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Statutes affected:
Raised Bill:
INS Joint Favorable:
File No. 371:
Public Act No. 21-150: