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


Office of House Bill AnalysisH.B. 2482
By: Kitchen
Insurance
7/20/2001
Enrolled



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 when they are most at
risk. House Bill 2482 directs the commissioner of insurance to adopt rules
to stabilize long-term care insurance rates, taking into consideration
nationally recognized models of rate stabilization.    

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 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
reasonable in relation to benefits provided 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 to adopt rules to stabilize long-term
care insurance premium rates that are consistent with nationally recognized
models relating to the stabilization of long-term care insurance premium
rates that existed on January 1, 2001. The bill authorizes the commissioner
to adopt rules consistent with any of those models as they are amended
after January 1, 2001. The bill requires the commissioner to adopt such
rules that contribute to the uniformity of state laws and protect
consumers. The bill authorizes the commissioner to exempt long-term care
insurance policies from the requirements of provisions relating to
reasonable benefits and loss ratio standards in adopting such rules. The
bill requires the commissioner to adopt the rules by January 1, 2002. 

 EFFECTIVE DATE

September 1, 2001.