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A06730 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A6730
 
SPONSOR: Barclay
  TITLE OF BILL: An act to amend the insurance law, in relation to providing transparency in long term care insurance rates   PURPOSE OR GENERAL IDEA OF BILL: To provide long term care policyholders with greater transparency and input in the rate setting process.   SUMMARY OF PROVISIONS: The bill adds a new subdivision (h) to Insurance Law § 1117 to require that all rate filing applications concerning policies providing coverage for long term care shall include a plain language summary with graphics that are in an easily understood format. Prior to making any such filing with the Department of Financial Services (DFS), an insurer would be required to notify policyholders of any proposed rate increase. Such notification shall include a statement describing how the rate filing will impact policyholders and provide a good faith estimate, specific to the policyholder, of the policyholder's renewal rate if the rate filing application is approved along with a comparison of that rate along with the rate such policyholder would pay if such application is not approved by DFS. The notice would also be required to provide a link to a website where the policyholder may review a complete copy of such rate filing application.Further, DFS would be required to post all rate filing applications concerning policies providing coverage for long term care on its website within 7 days of receipt of any such application. Final- ly, DFS would be required to accept comments from policyholders concern- ing any such rate filing application for a period of 45 days from the date on which such application was filed and shall consider all such comments in its adjudication of such application.   JUSTIFICATION: Long term care policyholders routinely face astronomical increases in their long term care insurance rates with no input in the process and little or no explanation from DFS or from the insurance carrier. By the time they learn about a rate increase, it has already been approved by DFS and their only options are to either accept the new rate or discon- tinue the policy, often when they need it the most. The costs of these policies were initially underpriced by insurance companies due in part to an underestimation of policyholder dropout rates. When policyholders retained their policies much longer than the insurers initially project- ed, it led to a crisis amongst insurers who hadn't charged enough in premiums to cover the actual costs associated with these policies. Their mistakes and lack of foresight has led to many insured people facing doubling or tripling of their rates, as their own income has decreased due to retirement. If nothing else, the voice of these policyholders should be heard as part of the rate setting process and they should be given advance notice of the carrier's application for a rate increase. This bill would provide policyholders with the transparency, input, and respect they deserve.   PRIOR LEGISLATIVE HISTORY: A8398 of 2020-Held in Insurance   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None   EFFECTIVE DATE: Immediately
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