4234746, 69O-157.301 - Florida Administrative Rules, Law, Code, Register

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Florida Department of State and Division of Library and Information Services

Notice: 4234746

Notice of Proposed Rule

Department:

DEPARTMENT OF FINANCIAL SERVICES

Division:

OIR – Insurance Regulation

Chapter:

LONG-TERM CARE INSURANCE

Overview

RULE:

69O-157.301	Rate Increase Standards
69O-157.302	Facility Only Rates (Repealed)
69O-157.303	Home Health Care Only Rates (Repealed)
69O-157.304	Comprehensive Only Rates (Repealed)

PURPOSE:

To establish a framework for evaluating rate increases for long term care insurance, and to ensure that the rate increases are not excessive.

SUMMARY:

Section 627.9407(7)(c), Florida Statutes, provides that rates charged to an insured for renewal of an existing long term care insurance policy may not exceed the price the insurer charges for newly issued polices. The problem this statute addresses relates to “closed blocks” of business. A closed block of business occurs when a particular approved policy is no longer being sold to new customers. There will be a group of insureds who have the insurance, and they will continue to be renewed, but no new customers will be sold that policy. This statute protects those insureds in that closed block by precluding an insurer from having higher renewal rates than its rates for new business.
For insurers that are not currently issuing new policies, the statute requires the Office of Insurance Regulation to establish and publish a “new business rate”, above which the renewals cannot be priced. The new business rate is published annually by the Office of Insurance Regulation, and is determined by reviewing the past year’s premium of those carriers which represent 80% of the market share of carriers currently selling long term care products. For example, this means that a carrier may not raise its rates on a policy first purchased in 1990 to a premium level that exceeds the cost of a similar policy which is purchased as a new product in 2007.
This new rule implements this statute by defining terms used in the statute and explaining how calculations are to be done so the insurer can be sure it is in compliance with the statute.

RULEMAKING AUTHORITY:

627.9408(1) FS.

LAW:

627.031(1)(a), 627.062, 627.9407(7) FS.

PRINT PUBLISH DATE:

6/8/2007 Vol. 33/23

COMMENTS:

From 6/8/2007 To 6/29/2007 (21 Days)
The public comment period for this notice has already expired.

REFERENCE MATERIALS:

No reference(s).

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