CID: Long-Term Care Rate Filing - American General Life Insurance Company (Individual)

Long-Term Care Rate Filing - American General Life Insurance Company (Individual)

Rate request: 58.8 percent increase

Decision: Disapproved, limited to a 40% increase on March 27, 2018.

On February 9, 2018, American General Life Insurance Co. requested an overall increase of 58.8 percent over the next three years on a small block of its individual long-term care plans. The company discontinued marketing the plans in 2001. There are approximately 70 policies currently in effect in Connecticut.

The company said it sought the increase because of the higher than projected benefit costs that would be required over the life of these policies. The company said that is the result of a higher than expected number of policies still in force and the projected costs of claims for those policyholders expected to draw on their benefits.

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 while the Connecticut block of business is performing somewhat better than company’s nationwide block of business, it is performing worse than anticipated. The company has already exceeded the Connecticut statutory minimum loss ratio of 60 percent, meaning it must spend 60 cents of every premium dollar on paying claims over the life of the policy. The company has exceeded that and is spending over 70 cents per premium dollar. As a result, the Department disapproved the initial rate increase request but limited it to a 40 percent increase to be spread out over three years or more per state law.

The company said it would offer its policyholders benefit options in order to mitigate the impact of a rate increase. The new rates will take effect August 1, 2018.


Find the filing documents here at Long-Term Care Insurance Rate Filing

Content Last Modified on 3/27/2018 11:29:56 AM