Long-term care insurance.

Existing law provides for regulation of insurers, including insurers issuing policies of long-term care insurance, by the Insurance Commissioner. Existing law requires benefits under individual long-term care insurance policies issued before new premium rate schedules are approved to be deemed reasonable in relation to premiums if the expected loss ratio is at least 60%, calculated in a manner that provides for adequate reserving of the risk. This bill, for policies issued before new premium rate schedules are approved and for which rate revisions are filed on or after January 1, 2010, would deem benefits reasonable in relation to premiums if the premium rate schedules have a lifetime expected loss ratio of at least 60% of the premium scale in effect on December 31, 2009, plus 70% of premium increases filed on or after January 1, 2010. The bill would, notwithstanding these provisions, authorize the commissioner, for rate increases filed on or after January 1, 2010, to approve an application for a rate revision based on less than a 70% loss ratio, but not less than a 60% loss ratio, for the portion attributable to the rate increase if an insurer can demonstrate that the rates are necessary to protect the financial condition of the insurer. Existing law requires actuaries used by the commissioner to review rate applications submitted by insurers relative to long-term care insurance, whether by employment or by contract, to be members of the American Academy of Actuaries with at least 5 years' relevant experience. This bill would revise these qualifications, as specified, and would make other technical changes.