Rate request: 22.68 percent increase (To be phased in over 3 years)
Decision: Approved February 9, 2015
December 5, 2014, Metropolitan Life Insurance Company requested a 22.68 percent increase on a block of business of individual long-term policies which were sold from 1991-2004.
They are no longer being marketed. There are 524 policies in force in Connecticut.
The company said in its filing that the increase was needed because over the life of these polices the expected demand for benefits and the higher cost of those benefits far exceeded 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.
After an actuarial review the Department determined that this block of business was, in fact, performing far worse than anticipated when the original pricing was calculate. The actual experience shows that the loss ratio the percentage of premium dollars spent on actual benefits was approximately 86 percent, much higher than the 60 percent minimum mandated in state law and could eventually exceed 100 percent.
As a result, the Department approved the request, noting that a new state law now requires that any increase over 20 percent be phased in gradually over three years, or in this instance 7.05 percent per year for the next three years.
The company also will offer its customers options to reduce or change benefits to offset the impact of an increase.