CA LTC Agents: AB 999 Passed

Note: AB 999 when first introduced almost guaranteed more Insurance companies exiting CA.  I have reviewed 3 articles and this one published by John Hancock works best for me.

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Revised version of California Assembly 999 passed on August 31st  September 7, 2012

Over the past two years, the LTC industry (including John Hancock) has been working with the California Insurance Department (CID) and legislators on revisions to rate stabilization and consumer disclosure requirements.

As originally introduced in early 2011, California Assembly 999 (AB 999) contained provisions which would have a significant and negative impact on the marketplace. The most problematic was the provision that would limit a carrier's ability to raise rates more than every 5 years for pre-rate stabilized business and every 10 years for post-rate stabilized business. This bill was withdrawn in mid-2011 with the caveat that the industry would work with the CID and Legislators on additional reforms.

On August 31st, a revised version of AB 999, that removed the more onerous aspects of the original bill, was passed by the Legislature Key. Provisions of the bill to include the following:

•Actuarial Requirements - The bill adds additional actuarial requirements that must be met by
carriers when filing initial products or rate increases in the area of loss ratios, pooling, interest rates
and contingent nonforfeiture. The bill also allows for a carrier to implement a requested/approved rate increase in smaller annual segments over time. The 5-year/10-year restriction on a carrier's ability to raise rates was not included in the re-introduced and final version of AB 999.
•Enhanced Disclosure & Access to Information - The bill also improves consumer disclosure and
access to information regarding a carrier's long-term care insurance product portfolio.

Next steps – We expect Governor Jerry Brown to sign this bill shortly. California AB 999 will become effective on January 1, 2013.