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

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

Rate request: 86 percent increase

Decision: Disapproved, limited to 30% increase on February 16, 2018.

On November 7, 2017, Principal Life Insurance Co. requested an average increase of 86 percent for its individual long-term care plans. The plans were first issued in 1994 but are no longer being marketed. There is one policy in effect in Connecticut.

The company said it sought the increase because the claims costs have greatly exceeded what was anticipated when the product was originally priced.

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 although the Connecticut block of business is very small, the company’s national experience on this product has greatly deteriorated. In fact, the company is spending about $1.30 on benefit costs for every $1 of premium it taxes in. That far exceeds the company’s expected costs of 80 cents for every premium dollar. As a result, the Department disapproved the initial rate increase but allowed a 30 percent increase on February 16, 2018.

The company said it would offer its policyholders benefit options in order to mitigate the impact of a rate increase. Under Connecticut law, increases of 20 percent or more must be phased in over three years.


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

Content Last Modified on 2/16/2018 10:58:00 AM