ORLANDO, Fla. — Action 9 exposes sky-high premiums that were just approved that could force thousands of families to cancel their insurance.
Todd Ulrich has tracked long-term care insurance premium increases for three years and now this could be the worst.
At 72, Carrie Ford is an interior designer who isn't ready to quit redecorating homes. But an investment she made 25 years ago to protect her golden years just blew up in her face.
“Well I feel I've been raked over the coals,” Ford said.
She got a notice from Genworth Life Insurance about a long-term care policy she took out in 1992. The notice announced a jaw-dropping rate hike. Her $1,700 annual premium soars to more than $4,000--a 130 percent rate hike.
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“And here I am close to my retirement age-- and I'm doomed,” Ford said.
The rate hike phases in over two years.
In the 1990s, the long-term care industry claimed if you started your policy then, you locked in lower premiums.
“Why did I take the policy out when I was younger If I didn't need to,” Ford said.
Florida's Office of Insurance Regulation just approved the hike. Action 9 asked the state agency why. An agency spokesman said Genworth wanted a 310 percent increase and the 130 was approved only with a seven-year lock against more increases.
Customers who planned on that policy covering assisted living or a nursing home will now have to drastically cut coverage to avoid big premium hikes, or they may have to cancel.
The rate hike not only impacts policy holders but their children, too.
“The reason you took out the policy was to not burden your children,” Ford explained.
A Genworth spokesperson told Ulrich the company lost $3 billion from older policies because of higher claims than expected. And with rate hikes, the company only breaks even. Genworth also claims the dilemma is industrywide.
Ford is not buying that answer.
“I can't afford this policy any longer,” she said.
The company claims that if a customer cancels, they'll still have some limited coverage, depending on what they paid.
However, customers like Ford still fear even bigger premium increases are possible before they even get to make a claim.
Genworth's written response to Action 9:
Reasons for Increase
Genworth has lost $3.1 billion cumulatively in our long term care insurance business on our older policies, due to higher than expected claims costs, and we continue to lose money on these older policies each year -- losses we will never recover. This is an issue that has affected the entire long term care insurance industry. We continue to file for premium rate increases to bring these older policies closer to break-even. The rate increases we are currently implementing in Florida were filed with and approved by the Florida Office of Insurance Regulation and are being phased in over multiple years.
How We Work with Policyholders Who Receive Premium Increases
Because we recognize the burden and uncertainty that premium rate increases can create for our policyholders, we continue to offer them a variety of options to consider when faced with rate increases. These options can help them reduce or avoid premium increases altogether by adjusting their benefits, while still retaining meaningful coverage. We also make sure that no policyholder loses the premiums they’ve paid over the years – even if they chose not to pay a penny more. To anyone who does not already qualify for it, we voluntarily provide a paid-up policy equal in value to the premiums paid to date, less any claims paid, so that they still have some coverage in place and can still access care coordination services, which can be critically important at the time of need. We have a dedicated team of customer service representatives that are available to assist our policyholders by answering questions and reviewing these options.
Even with the premium increases, long term care insurance provides a tremendous benefit, which explains why the vast majority of our policyholders elect to pay the rate increase rather than reduce their coverage. Policyholders who purchased a long term care insurance policy at a younger age will continue paying lower premiums than policyholders who purchased the same benefit at an older age.
Our Commitment to the LTC Industry
Genworth remains committed to the long term care industry and committed to helping the industry fix the problems of the past. In fact, we are working with regulators to adopt a new annual rerating model on future LTC insurance policies, similar to the way home, auto and health insurance policies are rated, that is intended to result in smaller, more frequent changes -- whether increases or decreases -- as needed, in order to reduce the likelihood of a policyholder experiencing a significant rate increase after several years of level premiums. We believe this new pricing framework will result in more predictability and manageability for those who purchase the product.
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