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Insurance Commissioner Dave Jones Announces Passage of Long-Term Care Insurance Legislation In Senate

News: 2012 Press Release

For Release: June 15, 2012
Media Calls Only: 916-492-3566
Email Inquiries: cdipress@insurance.ca.gov

Insurance Commissioner Dave Jones Announces Passage of Long-Term Care Insurance Legislation In Senate

Insurance Commissioner Dave Jones today announced that the Senate Committee on Insurance passed AB 999, authored by Assembly Aging and Long Term Care Committee Chair Mariko Yamada (D-Davis), by a vote of five to three. The bill, sponsored by Commissioner Jones and the California Department of Insurance, protects consumers from excessive premium rate volatility by modifying the long-term care insurance premium rate development process. The measure also allows consumers to make more informed decisions about buying a policy by giving them the chance to review language before purchasing one.

"Perhaps the most urgent issue currently facing senior consumers today is the rising cost of long-term care insurance," said Commissioner Jones. "This bill will curb a troubling trend in the number and size of long-term care rate increases. Without this legislation, consumers, many on fixed incomes, will continue to face uncertainty, never knowing what rates to expect from year to year."

"We're living longer and coming to terms with the need and costs of long-term care," said Assembly Member Mariko Yamada. "I am honored to work with Insurance Commissioner Dave Jones in setting a high-bar for the long-term care industry in California. AB 999 brings necessary transparency and additional protections for consumers of this important insurance product."

Long-term care (LTC) insurance was first sold in California in the early 1980's. Since it was a new product, insurers had no historical experience upon which to rely when setting initial premium rates. As a result, pricing of LTC policies was often based upon what were later found to be inaccurate assumptions. As insurers gained more experience in the market, premium rates increased to compensate for those initial inaccuracies. In 2000, the Legislature passed SB 898 to stabilize what became escalating rates. However, the rate stabilization features passed years before aren't completely restoring predictability as intended to the long-term care insurance market today.

AB 999 would:

  • Prevent insurers from passing poor investment returns through to taxpayers;
  • Eliminate the practice of insurers "cherry-picking" a small group of policies to justify large rate increases;
  • Prohibit insurers from using a loss ratio that is a "moving target" to justify raising rates merely to make a profit, and;
  • Require insurers to allow consumers to view policy language prior to purchasing the policy.

The bill now moves to the Senate Committee on Appropriations for consideration.



Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.

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