State residents will see a major increase in their long-term care insurance premiums
Kansas residents that have purchased long-term care insurance will be hit by significant rate increases in the near future. Policyholders have been reporting that they have been notified that they will see rate increases as high as 60%. The Kansas Insurance Department has confirmed that this is, indeed, the case, as regulators have approved significant rate increases coming from insurers. For many consumers, this may become a major financial burden that may mean they would lose their long-term care insurance coverage.
Insurers were not prepared for the level of claims they have been receiving
Cindy Hermes, director of public outreach for the Kansas Insurance Department, notes that many companies began offering long-term care insurance in the 1970s and 80s. These companies may not have foreseen how long this coverage would last, which meant that they began experiencing a greater degree of financial strain. Initially, this form of coverage had been priced very low, but insurers now need to recover from the financial losses of this practice.
Some consumers could see rates increase by as much as 200%
For some consumers, rate increases beyond 60% may be a possibility. The degree at which rates will increase is based on a multitude of factors. According to Hermes, the state had worked to negotiate a very modest increase in rates, but was ultimately unsuccessful. Some consumers could see rates rise by as much as 200% and there may be very limited options when it comes to managing the financial pressure that such a massive rate increase entails.
Higher premiums will help insurers recover from unexpected financial losses associated with claims
Insurers have noted that the rate increases were necessary as more policyholders were filing claims. These claims have been occurring over a longer period of time than insurers had predicted. As such, they have begun to experience financial losses that they can no longer manage. Rate increases will help insurers recover from these losses and continue providing customers with long-term care insurance coverage.