Information from Florida Office of Insurance Regulaiton re Long-Term Care Senior Protection Bill Advances in Florida House 4/03/2006

Jan 5, 2007

Please see the below regarding information from the Florida Office of Insurance Regulation. Should you have any questions or concerns, please do not hesitate to contact this office.


Senior Protection Bill Advances in Florida House

The House Insurance Committee unanimously approved a bill Thursday that provides strong protection against large rate increases and assures availability and affordability for senior citizens who purchase long-term care insurance protection.

If it becomes law, HB 1349, sponsored by state Rep. Frank Farkas, R-St. Petersburg, will bar insurers from denying a claim by the policyholder because of statements made in the original application for the policy if it has been in effect for more than two years.

The legislation also says insurers cannot claim a policyholder concealed information if the policy has been effective for the same period of time.

Long-term care policies, generally held by senior citizens, are typically sold many years before any claims against them are filed.

Seniors who file claims may be mentally impaired and unable to remember information they provided when policies were purchased and cannot defend themselves against fraud allegations.

Companies will be able to uncover any fraudulent statements in the two-year window, but will not be able to do their underwriting at the time of claim.

Farkas said the bill helps elderly policyholders by limiting the grounds insurers can use for non-payment of claims.

The incontestability provision mirrors life insurance policies, which also have a two-year window for examination of information provided by policyholders and have been part of Florida’s law since the 1950s.

The bill also protects seniors from excessive rates by not allowing charges to current policyholders that are higher than rates for a new policy with identical coverage. This provision keeps insurers from skyrocketing premium increases when policyholders die and the pool of insureds gets smaller.

This is called “closed block” coverage and has resulted in filed rate increases of more than 200 percent annually for some unsuspecting policyholders who are forced to either cancel their policies because of the extra cost or pay the higher cost when they are on fixed incomes.

A press conference is being planned for Wednesday, but the time and place have not been finalized.