California passes A.B. 999, LTCI rate bill

By National Underwriter

National Underwriter

By Nichole Morford

The California State Legislature took a step to tighten consumer protections today when it passed A.B. 999, a bill that protects consumers from excessive premium rate volatility and increases transparency between insurer and consumer.

The bill, authored by Assembly Aging and Long-Term Care Committee Chair Mariko Yamada (D-Davis), gives consumers the chance to make a more informed policy decision by allowing them to review language before making a purchase. It also limits rate increases to once every five years for policies that have been in place since before 2000, and once every 10 years for policies signed since that date.

First sold in California in the 1980s, long-term care insurance products have seen severe rate increases, largely because there was no competitive product upon which to base the initial premium rates. As early assumptions were found to be inaccurate, rates skyrocketed, prompting an earlier bill to stabilize rates, S.B. 898, which passed in California in 2000. As an additional protective measure, A.B. 999 would prevent insurers from passing poor investment returns through to taxpayers and eliminate the practice of insurers “cherry-picking” a small group of policies to justify large rate increases, among other strong consumer protections.

California Insurance Commissioner and bill sponsor Dave Jones praised the bill as "necessary legislation" when it came to protecting seniors.

“The rising cost of long-term care insurance is one of the most pressing issues facing senior consumers today,” said Commissioner Jones. “What’s most disturbing is the size of long-term care rate increases. They threaten the ability of many seniors, especially those on fixed incomes, to maintain or purchase long-term care insurance."

The bill now goes to Governor Jerry Brown for signing.

Originally published on