CID: Long-Term Care Rate Filing - Physicians Mutual Insurance Company (Individual: 2004-2007)

Long-Term Care Rate Filing - Physicians Mutual Insurance Company (Individual: 2004-2007)

Rate request: Average increase of 60 percent

Decision: Disapproved, limited to a 30 percent increase on September 8, 2017

On May 15, 2017 Physicians Mutual Insurance Company requested an average rate increase of 60 percent on a small block of business of P145 individual long-term policies which were sold from 2004 to 2007 and are no longer being issued.

There are 22 policies in force in Connecticut.

The company said in its filing that the increase is because the cost of the benefits it anticipates paying out far exceeds the estimates when this product was originally priced. Part of that is due to people living longer, holding onto their policies longer and drawing on benefits longer than originally assumed.

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 the company has already exceeded the statutory threshold a 60 percent loss ratio meaning a company must spend at least 60 cents of every premium dollar on benefits over the life of the policy. In fact, Physicians Mutual is currently spending about 65 cents of every premium dollar on benefits and increasing costs could push that over 100 percent. And while some rate increase is warranted, the Department noted that the Connecticut sampling is not as credible as the nationwide block of business. As a result, the Department disapproved the original increase request on September 8, 2017 and instead limited it to 30 percent.

Per state law any increase of 20 percent or more must be phased in over three years. Physicians Mutual said it would offer its customers options to reduce or change benefits to offset the impact of an increase.


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

Content Last Modified on 9/8/2017 9:45:08 AM