Requires the superintendent of financial services to make public any rate filing or application submitted by long term care insurance carriers; requires certain notices be provided to policyholders and certificate holders regarding premium rate increases.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A345C
SPONSOR: Burdick TITLE OF BILL:
An act to amend the insurance law, in relation to requiring certain
notices be posted and provided regarding long term care insurance policy
changes
PURPOSE:
To increase transparency in the long-term care insurance premium rate
increase approval process by providing for additional communications to
insureds by the Department of Financial Services with respect to a rate
increase application and the ability for public comment, to require that
the best interest of the policyholders be considered by the Department
of Financial Services when making a determination as to such applica-
tion, to require additional disclosures to policyholders by insurance
companies, and to ensure a high minimum loss ratio standard for premium
increases for longterm care insurance policies.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 requires insurers offering long-term care insurance to provide
prospective insureds with:
(a) a written statement informer prospective customers that they
(b) historical premium rate increases over the previous ten years for
such policy (or a similar policy),
(c) contact information for DFS and the insurer,
(d) information about whether not the premium can increase, and if so,
under what circumstances,
(e) whether the policy contains any refund provisions,
(f) a description of ways to mitigate future premium increases,
(g) a description of policyholder options for surrendering the policy,
(h) a statement that the policyholder will have 60 days' written notice
before any premium increase,
(i) a statement that if the insurer seeks a premium increase, DFS will
post notice of the rate filing on its website, and
(j) notice that policyholders may publicly comment on the rate increase
application on the Department of Financial Services website.
Section 2 places requirements on both the Department of Financial
Services and insurers: The Department of Financial Services under the
provisions of Section 3 must
(a) make public any application for a long term care insurance premium
rate increase;
(b) post on its website the process it uses for.reviewing and approving
premium rates;
(c) provide for 30 days of public comment on the rate increase applica-
tion on its website; and
(d) make public its written decision regarding approval, disapproval, or
modification of any premium rate increase application, including:
(i) a summary of its determinations, and (ii) a written statement as to
why the decision is in the best interests of the policy holders. Under
the provisions of section 3, insurers providing long term care insurance
must notify policyholders 90 days prior to when their premium will
increase. The notice must include:
(a) a description of the decision; and
(b) the same information required by section 1 of the bill related to
the likelihood of future premium increases and historical increases.
Section 3 provides the effective date.
JUSTIFICATION:
Long-term care insurance can provide financial security later in life by
mitigating the high financial burden of paying for increased care that
people may need as they age. Unfortunately, the long-term care insurance
industry has raised premiums significantly and frequently. Many New
Yorkers who purchased these policies are understandably distressed to
find that they are paying premiums far higher than what they thought
they would be paying when they originally agreed to the policy. The
increases are so substantial that many policyholders are forced to drop
their policies altogether. An article in the New York Times on August
23, 2019, "Your Long-Term Care Insurance Rate Spiked. Now What?"
details the challenges of struggling to keep up with skyrocketing premi-
ums. To make matters worse, the process by which insurers obtain
approval from the Department of Financial Services for premium increases
is opaque and lacks all opportunity for policyholder input.
This legislation will give insureds more clarity and a stronger voice
when insurers seek premium increases by increasing transparency, requir-
ing additional background information, and providing for public comment
at the time that rate increase applications are under consideration.
Long-term care insurance will continue to pose financial challenges for
New Yorkers for a long time to come. However, this bill will eliminate
some of the current lack of information and disregard for consumer
participation so that the Department of Financial Services and the
insurers are forced to recognize that they are not the only two parties
involved in the premium rate increase process - the policyholder is the
third, and most important, party when it comes to any premium increase
filing - they are the ones actually paying the premiums, and they are
currently excluded from participating. This conduct by the Department of
Financial Services and insurers needs to change, and this bill is a
major step in the right direction.
PRIOR LEGISLATIVE HISTORY:
2021/22: S4327-C (Mayer): advanced to Third Reading and committed to
Rules (2021); passed Senate (2022)
FISCAL IMPLICATIONS:
To be determined.
EFFECTIVE DATE:
The act shall take effect 180 days after becoming law.
