In June 2012, the Senate Committee on Insurance passed Assembly Bill 999 by a vote of five to three. The bill, sponsored by Commissioner Jones and the California Department of Insurance, modifies the long-term care insurance premium rate development process and requires that consumers be permitted to review policy language before purchasing a policy. Proponents of the bill believe it will help curb the number and size of long-term care rate increases, an issue perceived to be a consequence of inaccurate assumptions on an insurance product that was introduced relatively recently compared to other products.
Among the proposed changes, this bill would:
- require an insurer of long-term care insurance to post clearly on its Internet Web site and provide written notice at the time of solicitation that a specimen individual policy form or group master policy and certificate form for each policy form offered by the insurer is available upon request, and to provide that form within 15 calendar days upon request;
- require the annual consumer rate guide to include a specimen outline of coverage for each product currently marketed by each insurer listed in the rate guide;
- provide that if the premiums in rate revision filings produce a lifetime expected loss ratio that is less than the highest lifetime expected loss ratio for the policy form in the initial filing or for requested premium rates in any filing made after January 1, 2013, the insurer would be required to reduce the premiums such that the current lifetime expected loss ratio is equal to or greater than the highest filed loss ratio, as specified;
- set forth criteria for calculating the margin in the determination of a lifetime expected loss ratio;
- prohibit an insurer from justifying a rate increase prior to approval by the Insurance Commissioner based upon asset investment yield rate changes, except as specified;
- require that all of the experience on all similar long-term care policy forms issued by an insurer and its affiliates and retained within the affiliated group be pooled together and used as the basis for determining whether an increase is reasonable or shall [should?] be approved under specified provisions; and
- require that similar long-term care policy forms be classified into benefit classifications of nursing facility and residential care facility only, home care only, or comprehensive long-term care benefits.
The bill now moves to the Senate Committee on Appropriations for consideration.