MetLife, Unum reach deals to phase in Fla. long-term care hikes

Florida regulators said Thursday insurers MetLife and Unum have reached agreements to phase in rate hikes for long-term care and not seek additional increases for 10 years.

Seniors from Palm Beach County and around Florida said in hearings last  year they felt “scammed” by requested increases up to 114 percent.

Florida Insurance Commissioner David Altmaier
Florida Insurance Commissioner David Altmaier

How consumers react to the deal remains to be seen. Over the next three years, agreements allow  average monthly premium increases ranging from $4 to $44 for MetLife and $5 to $55 for Unum, the Florida Office of Insurance Regulation said. During the next seven years after that, “rates will be guaranteed,” a statement from the state agency said.

“The Office will continue to encourage other long term care insurers to approach rate needs in a similar fashion for the benefit of their policyholders, many of whom are on fixed incomes,” Florida Insurance Commissioner David Altmaier said. “This plan effectively balances the company’s need for rate increases against the impact that those increases have on policyholders who have invested in these products over a period of many years.”

Consumers can also choose to take reduced benefits under a variety of plan options.

Long-term care insurance pays for services such as help with bathing, dressing, eating or housework, at home or an assisted-living facility. Medicare typically does not pay for such services, and more than 10 million people have purchased policies from the private market.

MetLife has more than 22,000 long-term care policyholders in Florida, including 1,883 policies in Palm Beach County and more than 2,000 in Broward County. Under its original request, the average premium would increase from $1,593 to $2,580, according to state officials.

“MetLife appreciated the opportunity to participate in July’s public hearing and worked collaboratively with the Florida Office of Insurance Regulation on implementation details and policyholder communications,” a company statement said Thursday.

Unum Life Insurance Co. of America and related firms have more than 45,000 long-term care customers in the state, including about 1,500 in Palm Beach County. Unum’s proposed increases ranged from 75 percent to 114 percent under different plans. Unum officials could not be reached.

Many consumers said they felt betrayed after paying premiums for years for services they expected to rely on when they got older. Companies said initial cost assumptions proved to be inadequate as people lived longer and required more services.

MetLIfe, Unum under scrutiny for big rate hikes in hearing today

Bernard Haut
Bernard Haut

Seniors as far away as Wellington say they are planning to attend a hearing today in Miami on proposed rate increases up to 114 percent in long-term care insurance.

Others can watch the hearing that starts at 1 p.m. live on the Internet at The Florida Channel.

Hearings for MetLife and Unum deal with proposed rate increases up to 95 percent and 114 percent respectively.

After hearing testimony from company officials, consumers and others, the state’s Office of Insurance Regulation will issue a decision in coming weeks.

The insurance pays for services like help with bathing, dressing, eating or housework, at home or an assisted-living facility. Such services are not routinely covered under Medicare, and more than 10 million people have purchased policies from the private market. But insurance companies say costs have mushroomed as people live longer and use the services more, forcing them to seek higher rates.

As The Palm Beach reported, seniors like Bernard Haut of Boynton Beach say the rate increase are unfair to people on fixed income: “They are forcing people who probably can’t afford this increase to give it up when they now need it more than ever.”

 

Hearing on MetLife, Unum

  • Date: Today, Friday, Aug. 12
  • Time: 1 p.m.
  • Place: Kovens Conference Center, Room 1145, Florida International University, Biscayne Bay Campus, 3000 N.E. 151st St., Miami
  • Watch: thefloridachannel.org

MetLife, Unum hikes up to 95% and 114% draw Fla. hearing

Bernard Haut
Bernard Haut

Florida regulators said Wednesday they have scheduled a hearing Aug. 12 on requests by two companies to raise long-term care insurance rates up to 95 percent and 114 percent.

Hearings for MetLife and Unum mark the latest developments in rocketing rates that have distressed seniors like Bernard Haut, 81, of Boynton Beach.

“They are forcing people who probably can’t afford this increase to give it up when they now need it more than ever,” Haut told The Palm Beach Post in May.

The insurance pays for services for people who need help with things like bathing, dressing, eating or housework, at home or an assisted-living facility. Such services are not comprehensively covered under Medicare, and more than 10 million people have purchased policies from the private market. But insurance companies say costs have exploded as people live longer and begin to use the services more.

Metropolitan Life Insurance Co., the largest life insurer in Florida and one of the largest players in long-term care, is proposing an average premium increase from $1,593 to $2,580, the state’s Office of Insurance Regulation said.

MetLife has more than 22,000 long-term care policyholders in Florida, including 1,883 policies in Palm Beach County and more than 2,000 in Broward County, its two largest markets in the state.

Unum Life Insurance Co. of America, the largest provider of disability insurance in the U.S., has more than 45,000 long-term care customers in the state. Its average annual premium would rise from $581 to $862, officials said. It has about 1,500 customers in Palm Beach County.

Regulators have not always been persuaded that the full requested increases were justified in Florida, records show. Since 2010, the cumulative industry average increase granted by Florida regulators among about two dozen companies was 20.6 percent, though companies often asked for much more — as much as 148 percent.

In May, MetLife spokeswoman Judi Mahaney told the Post, “The long-term care insurance industry as a whole is facing challenges as a result of evolving actuarial assumptions on pricing, and MetLife is no exception.”

The company offers ways to “mitigate” the impact of rate increases through options that can include reducing benefits, she said. For customers who cancel because of an increase, policyholders can get reduced benefits up to an amount they have already paid in premiums, Mahaney said.

MetLife had no additional comments this week.

Here is a full statement from Unum:

“Unum determined the prices for its long term care (LTC) business using the best data available at the time and applying assumptions and predictions about how future experience would develop. Unfortunately, like many in the industry, our actual experience in the years or even decades since those policies were issued has turned out to be significantly different than the actuarial assumptions used to set the original premiums. The individuals who are covered under the LTC policies are both living longer and holding on to their policies longer than anticipated, leading to more claims being made. Once on claims, they are also staying on claim longer than expected. At the same time, investment earnings, which are used to support the payment of claims, continue to be significantly lower than projected given the overall, sustained low-interest-rate environment.

“One of the steps we have taken at Unum to decrease the financial risk posed by our long term care block of business is to file for premium rate increases as allowed under our contracts and the law.

“We know how difficult rate increases can be for policyholders. We will continue to provide alternatives to manage affordability for our customers. This may include options to adjust the inflation cap, reduce the benefit period or adjust the daily benefit levels. We also provide the policyholder the ability to take a non-forfeiture option whereby there no longer pay premiums going forward and can receive a benefit equal to the premiums paid for the policy to date.

“We don’t want to see any policyholder lapse their policy as a result of a rate increase and believe we offer reasonable and affordable alternatives.

“We take very seriously our commitment to providing service to our current policyholders – over one million insureds in the U.S. – and have a team of more than 150 professionals dedicated to providing customer service and administering benefits to those people who are currently on claim. We paid over $370 million in benefits during 2015, reflecting both our commitment and the value of these policies to consumers.”

 

Hearing on MetLife, Unum

  • Date: Friday, Aug.12
  • Time: 1 p.m.
  • Place: Kovens Conference Center, Room 1145, Florida International University, Biscayne Bay Campus, 3000 NE 151st Street, Miami

 

MetLife to pay $25 million in second-largest FINRA fine ever

moneystackMetLife Securities Inc. has been fined $20 million and ordered to pay customers $5 million for misrepresentations and omissions concerning variable annuities, regulatory officials said Tuesday.

The company represented to customers that their existing variable annuity was more expensive than the recommended investment, when in fact the existing one was less expensive, the Financial Industry Regulatory Authority said.

It represents the second-largest FINRA fine ever — after a $100 million fine in 2002 involving Credit Suisse First Boston in partnership with another regulator — and the largest involving variable annuities, officials said.

“Variable annuities are complex and expensive products that are routinely pitched to vulnerable investors as a key component of their retirement planning,” said Brad Bennett, FINRA executive vice president and chief of enforcement. “Firms engaging in this business must ensure that the information on the costs and benefits of these products provided to customers is accurate, and that their registered representatives are sufficiently trained to understand and explain the risks and complex features of what they are selling. These obligations take on even greater importance when a significant part of a firm’s marketing effort involves switching customers out of existing annuities.”

The company neither admitted nor denied the charges, but consented to the entry of FINRA’s findings, officials said.

A company spokesman said, “MetLife fully cooperated with the FINRA investigation and we are pleased to put this matter behind us.”

The products generated at least $152 million in gross dealer commission for the firm over a six-year period, according to FINRA. Regulators found that from 2009 through 2014, the company misrepresented or omitted at least one material fact relating to the costs and guarantees of customers’ existing annuity contracts in 72 percent of the 35,500 VA replacement applications it approved.

A Boca Raton-based, toll-free FINRA helpline for seniors is 1-844-574-3577.