The Connecticut Insurance Department has rejected a unit of Unum’s application for rate increases on certain Long Term Care Insurance policies throughout the state.
Application for Increase
UNUM Life Insurance Company of America, a unit of Unum Group Corporation, applied for a rate increase averaging 45% on their group policies in effect in Connecticut. Their original request cited the need to ensure “policies remain priced at an appropriate level to meet our future claims obligations.” Those group policies are no longer for sale, as the unit left the group Long Term Care Insurance market in 2012, but 2,217 Connecticut residents still have coverage.
Higher than Expected Claims Costs
Claims costs have been 123% higher than predicted on the group policies 
sold by UNUM Life, according to Paul Lombardo, an actuary at the Connecticut Insurance Department.
According to the filing, UNUM Life reported that Maine had granted a 72% rate increase on policies to be effected throughout a three year period. Connecticut didn’t agree with the need for an increase in premiums, though. Citing an earlier increase of 30% that has yet to make an impact of the company’s experience, the state insurance department rejected the application.
LifeHealthPro reports that Connecticut has been especially strict when it comes to rate increases for Long Term Care Insurance providers. The state argues against the necessity of increases, saying the cost of claims in Connecticut has been low compared to the national average.
Long Term Care Insurance
Many Long Term Care Insurance providers are in the same boat when it comes to older policies that did not have tight underwriting standards or conservative estimates of cost. Most carriers have sought rate increases across the nation in order to make up for the heavy losses incurred due to the low interest rates, low lapse rates, and unpredictable morbidity and mortality. Several carriers have left the market in recent years due to the unpredictable nature of predicting these influencing factors, but some of the top companies still remain.
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