69O-157.301: Rate Increase Standards
69O-157.302: Facility Only Rates
69O-157.303: Home Health Care Only Rates
69O-157.304: Comprehensive Only Rates
PURPOSE AND EFFECT: 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.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: No Statement of Estimated Regulatory Cost was prepared.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
SPECIFIC AUTHORITY: 627.9408(1) FS.
LAW IMPLEMENTED: 627.031(1)(a), 627.062, 627.9407(7) FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
DATE AND TIME: June 27, 2007, 9:00 a.m.
PLACE: Room 116, Larson Building, 200 East Gaines Street, Tallahassee, Florida
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Tracie Lambright, Life and Health Product Review, Office of Insurance Regulation, E-mail: Tracie.Lambright@fldfs.com. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Tracie Lambright, Life and Health Product Review, Office of Insurance Regulation, E-mail: Tracie.Lambright@fldfs.com
THE FULL TEXT OF THE PROPOSED RULE IS:
69O-157.301 Rate Increase Standards.
(1) Rate increase filings for long term care insurance shall be filed in accordance with filing requirements and standards of Rule Chapters 69O-149 and 69O-157, F.A.C.
(2) The term “policies with similar coverage” has the same meaning as “similar policy forms” as defined in subsection 69O-157.103(17), F.A.C.
(3) Pursuant to the provisions of Section 627.9407(7)(c), F.S., for insurers that are currently actively marketing and issuing similar coverage, the rates resulting after a rate increase filing shall not exceed the insurer’s new business rate.
(4)(a) Section 627.9407(7)(c), F.S., requires that the office annually determine and publish the currently available new business rates for similar coverage being sold in
(b) The published rates shall be determined by first identifying those carriers currently issuing policies with similar coverage. For each of the similar coverage categories, the
(c)1. The new business rates are for the standard underwriting class for the insurer. Standard underwriting class is the underwriting class with the most predominant sales, measured by number of policies, regardless of the name given to it by the insurer.
2. The new business rates for other underwriting classes shall bear the same relationship to the standard rate schedules that the insurer has filed and approved. For example, if an insurer’s preferred rate is 85% of its standard rate, the premium limit applicable to the rate increase for business sold as preferred will be 85% of the standard rate schedule.
(d)1. The published new business rates represent the particular benefit configuration listed. If an insurer has policies in force that have benefits different from the benefit used to determine the published rates, the insurer may contact the office for the new business rate that reflect the different benefits.
2. The office shall determine the new business rates for the requested benefit configuration in the same manner as it used for determining the published rates. The resulting rates shall be consistent with the published new business rates reflecting benefit differences only.
3. Insurers needing a different benefit configuration should make such request of the office in advance of a rate filing so as to give the office time to determine such rates and provide them to the insurer.
4. If the office is unable to determine the rates by a tabulation of the insurers currently selling similar coverage, the office shall use its best actuarial judgment in determining the new business rates using the information available from the insurers in the 80% market share. Alternatively in such cases, at the option of the insurer, the insurer may submit the results of a model used to price new long term care products by an actuarial consulting firm currently pricing long term care for other clients, who is independent of the insurer, acceptable to the office, and contracted by the insurer. The assumptions used shall be available to the office for review and approval. The model will be used to develop the new business pricing for the insurer’s policy benefit configuration, the new business pricing for the published benefit configuration, and to develop a factor which is the ratio of the insurer’s policy benefits to the published benefits. It is noted that the provisions of Section 627.9407(7)(c), F.S., provide that the differences shall be benefit differences only; all other provisions of the two policies being modeled shall be identical. Such factor, representing benefit differences only, shall be used to adjust the published new business rates. Independent, as used in this section, shall mean that the actuarial consulting firm or the actuary to be involved in the project has no relationship currently or for the last three years with the insurers for pricing, valuation, or other reviews.
(e) If the application of this rule results in different increases being applied to different plans within the filing, the requirements of subparagraph 69O-149.003(1)(a)4., F.A.C. shall apply.
(f) The published rates apply to sales in Hillsborough county. For all other counties, the rate from the published table should be adjusted by the insurer’s current area factor applicable in that county relative to the insurer’s area factor in Hillsborough county.
(g) The premium for all additional benefits provided in the policy or by rider to the policy shall be the same proportion of the base rates after any rate change as they were before such change.
Specific Authority 627.9408(1) FS. Law Implemented 627.031(1)(a), 627.062, 627.9407(7) FS. History–New_______.
69O-157.302 Facility Only Rates.
(1) The following maximum new business rates are effective for 2006 rate increase filings and for 2007 rate filings until new rates are published: These annual rates are appropriate for:
(a) Tax qualified policies;
(b) A benefit of $100/day;
(c) An elimination period of 90 days.
(d) Policies offering Restoration of Benefits, and
(e) Sales in
(2)(a) Facility Only Rates.
|
Issue Age |
3-Yr Benefit Period |
5-Yr. Benefit Period |
Unlimited Benefit Period |
|
35 |
$247.43 |
$302.74 |
$378.50 |
|
45 |
$363.53 |
$446.70 |
$555.75 |
|
55 |
$522.32 |
$646.08 |
$810.43 |
|
65 |
$1,126.33 |
$1,406.97 |
$1,750.61 |
|
75 |
$3,073.57 |
$3,879.00 |
$4,769.07 |
(b) The insurers used to tabulate the above rates are:
|
Insurer |
Weighing Percentage |
|
Bankers Life & Casualty Company |
90.3% |
|
Penn Treaty Network America Insurance Company |
9.7% |
Specific Authority 627.9408(1) FS. Law Implemented 627.031(1)(a), 627.062, 627.9407(7) FS. History–New_______.
69O-157.303 Home Health Care Only Rates.
(1) The following maximum new business rates are effective for 2006 rate increase filings and for 2007 rate filings until new rates are published. These annual rates are appropriate for:
(a) Tax qualified policies;
(b) A benefit of $100/day;
(c) An elimination period of 90 days.
(d) Policies offering Restoration of Benefits, and
(e) Sales in
(2)(a) Home Health Care Only Rates.
|
Issue Age |
3-Yr Benefit Period |
5-Yr. Benefit Period |
Unlimited Benefit Period |
|
35 |
$166.18 |
$203.65 |
$242.26 |
|
45 |
$245.38 |
$306.44 |
$366.65 |
|
55 |
$369.58 |
$455.50 |
$548.26 |
|
65 |
$691.78 |
$836.06 |
$989.23 |
|
75 |
$1,318.83 |
$1,520.52 |
$1,702.93 |
(b) The insurers used to tabulate the above rates are:
|
Insurer |
Weighing Percentage |
|
Bankers Life & Casualty Company |
97.2% |
|
Colonial American Life Insurance Company |
2.3% |
|
Penn Treaty Network America Insurance Company |
0.5% |
Specific Authority 627.9408(1) FS. Law Implemented 627.031(1)(a), 627.062, 627.9407(7) FS. History–New_______.
69O-157.304 Comprehensive Only Rates.
(1) The following maximum new business rates are effective for 2006 rate increase filings and for 2007 rate filings until new rates are published. These annual rates are appropriate for:
(a) Tax qualified policies;
(b) A benefit of $100/day;
(c) An elimination period of 90 days.
(d) Policies offering Restoration of Benefits, and
(e) Sales in
(2)(a) Comprehensive Only Rates.
|
Issue Age |
3-Yr Benefit Period |
5-Yr. Benefit Period |
Unlimited Benefit Period |
|
35 |
$332.88 |
$414.10 |
$574.47 |
|
45 |
$474.36 |
$592.44 |
$822.62 |
|
55 |
$666.65 |
$824.77 |
$1,151.34 |
|
65 |
$1,313.19 |
$1,640.75 |
$2,259.55 |
|
75 |
$3,288.22 |
$4,210.08 |
$5,603.51 |
(b) The insurers used to tabulate the above rates are:
|
Insurer |
Weighing Percentage |
|
Bankers Life & Casualty Insurance Company |
52.7% |
|
Blue Cross Blue Shield of |
5.1% |
|
Genworth Life Insurance Company |
11.5% |
|
Great American Life Insurance Company |
9.8% |
|
John Hancock Life Insurance Company |
14.2% |
|
Metlife Insurance Company |
6.7% |
Specific Authority 627.9408(1) FS. Law Implemented 627.031(1)(a), 627.062, 627.9407(7) FS. History–New_______.