Rate request: 50 percent increase on its H-LC2J policy form
Decision: Disapproved as submitted, approved 20 percent increase
On September 27, 2013, MetLife Insurance Company of CT requested a 50 percent increase on its H-LC2J policy, which was sold from 1992 to 1994 solely in Connecticut and is no longer being marketed. There are 55 policyholders in Connecticut with this product.
The company said in its filing that the increase is needed because over the life of these polices the expected demand for benefits and the higher cost of those benefits exceeds both original pricing expectations and state minimum requirements.
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.
As a result of an actuarial review, the Department determined that the company’s claims costs were, in fact, much worse than original pricing anticipated. However, because of the small block of business of this particular plan, the claims costs in Connecticut were not as credible. The Department disapproved the 50 percent request on March 31, 2014 but did allow for a 20 percent increase, recognizing that the poor performance of this plan required rate relief. To mitigate the impact on policyholders, the Department asked that the company spread the increase out over three years. MetLife declined that request, indicating it plans to ask for additional increases to cover the cost of benefits expected on this block of business.
The company said policyholders will be able to change or reduce benefits in order to mitigate any rate increase. Additionally, the company will allow policyholders a one-time option for a paid-up policy with benefits equal to the total premiums paid less any claims.
The rate change will take effect on the policyholder’s renewal date.