HBA-NRS H.B. 2482 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2482
By: Kitchen
Insurance
3/23/2001
Introduced



BACKGROUND AND PURPOSE 

Long-term care is the assistance needed for an extended period if a person
develops an impairment in activities of daily living, such as dressing,
eating, and bathing, or a cognitive impairment, such as Alzheimer's
disease. Long-term care insurance is purchased for a future need. However,
many people who purchase long-term care insurance policies and initially
believe that a certain premium is paid throughout the duration of the
policy later find the premium is raised. In some cases, companies seeking
to increase market share have underpriced initial premiums and then raised
those premiums at a later date. Rate increases can cause elderly
policyholders to lose their coverage at the time they are most at risk. In
August 2000, the National Association of Insurance Commissioners (NAIC)
adopted model regulations for long-term care insurance rate stability.
House Bill 2482 directs the commissioner of insurance to adopt rules to
stabilize long-term care insurance rates, taking into consideration model
regulations adopted by NAIC.    

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the commissioner of insurance in
SECTION 1 (Section 5A, Article 3.70-12, Insurance Code) and SECTION 2 of
this bill. 

ANALYSIS

House Bill 2482 amends the Insurance Code to require the commissioner of
insurance (commissioner) to adopt rules to stabilize long-term care
insurance premium rates, not later than January 1, 2002, by:  

 _ensuring that initial rates for long-term care insurance policy forms are
adequate and that any rate schedule increases for long-term care insurance
policies made after issuance of the policies are justified, adequate, and
not unreasonably greater than the amount necessary to provide benefits to
policy or certificate holders;  

 _requiring appropriate policy terms; 
 
 _imposing penalties on insurers or other entities subject to minimum
standards for long-term care insurance policies that violate an adopted
rule; and  
 
 _protecting policy and certificate holders affected by a rate schedule
increase. 

The bill requires the commissioner, in adopting rate stabilization rules,
to consider any model statute or rule adopted by the National Association
of Insurance Commissioners relating to the stabilization of long-term care
insurance premium rates. The bill authorizes the commissioner by rule to
adopt any requirement reflected in one of those models. The bill authorizes
the commissioner to exempt long-term care insurance policies from the
requirements of provisions relating to loss ratio standards in adopting
such rules. 



 EFFECTIVE DATE

September 1, 2001.