AMENDED IN SENATE OCTOBER 19, 2004

SENIOR SENATE PROPOSAL NO. 1

INTRODUCED BY SENIOR SENATOR LEVY

(COAUTHORS: SENATORS BETTIO AND ERMAN)

(COAUTHORS: ASSEMBLY MEMBERS AGOR, EDGAR, AND MEADE)

LEGISLATIVE COUNSEL'S DIGEST

SP 1: LONG-TERM CARE INSURANCE.

UNDER EXISTING LAW, THE INSURANCE COMMISSIONER REGULATES LONG TERM CARE INSURERS. EXISTING LAW REQUIRES EVERY INDIVIDUAL AND GROUP LONG-TERM CARE INSURANCE POLICY TO BE EITHER GUARANTEED RENEWABLE OR NONCANCELABLE, AS DEFINED.  UNDER EXISTING LAW, THE COMMISSIONER IS REQUIRED TO ANNUALLY PROVIDE A CONSUMER RATE GUIDE THAT INCLUDES, AMONG OTHER THINGS, A PREMIUM HISTORY FOR EACH LONG-TERM CARE INSURER.

THIS MEASURE WOULD MEMORIALIZE THE LEGISLATURE AND THE GOVERNOR TO ENACT LEGISLATION THAT WOULD REQUIRE EACH LONG-TERM CARE INSURER TO OFFER AT LEAST ONE NONCANCELABLE POLICY AT A PREMIUM THAT MAY NOT BE INCREASED DURING THE POLICY'S TERM OR THE INSURED'S LIFE.  THE MEASURE WOULD REQUIRE INSURERS AND THEIR AGENTS TO PROVIDE TO EACH POTENTIAL INSURANCE CUSTOMER A WRITTEN OR PRINTED RATE CHANGE HISTORY INFORMATION FOR THEIR GUARANTEED RENEWABLE POLICIES TO THE COMMISSIONER.  THE MEASURE WOULD REQUIRE THE COMMISSIONER TO MAKE THE CONSUMER RATE GUIDE EASILY ACCESSIBLE TO CONSUMERS.

VOTE: MAJORITY.

SP 1: RELATING TO LONG-TERM CARE INSURANCE

WHEREAS, MANY INSURERS SELLING LONG-TERM CARE INSURANCE HAVE ISSUED POLICIES AND CERTIFICATES AT LOW PREMIUM RATES, ONLY TO SIGNIFICANTLY INCREASE THE PREMIUM AT A LATER DATE; AND

WHEREAS, THE UNEXPECTED INCREASED PREMIUM RATE CAUSES MANY SENIOR POLICYHOLDERS TO EITHER FORFEIT THEIR LONG-TERM CARE INSURANCE POLICY OR SUBSTANTIALLY REDUCE THEIR BENEFITS; AND

WHEREAS, INSURERS THAT OFFER GUARANTEED RENEWABLE LONG-TERM CARE COVERAGE DO NOT OFFER FOR SALE THE NONCANCELABLE VERSION OF LONG-TERM CARE COVERAGE; AND

WHEREAS, THE GREAT MAJORITY OF CONSUMERS WHO BUY AND MANY AGENTS WHO SELL LONG-TERM CARE INSURANCE POLICIES AND CERTIFICATES DO NOT KNOW THE DIFFERENCE BETWEEN "NONCANCELABLE" AND "GUARANTEED RENEWABLE" COVERAGE; AND

WHEREAS, INSURANCE COMPANIES ARE NOT REQUIRED TO PROVIDE A REASONABLE HISTORY OF RATE CHANGES ON THE GUARANTEED RENEWABLE POLICIES AND CERTIFICATES THEY ARE MARKETING TO CONSUMERS; AND

WHEREAS, CONSUMERS HAVE LITTLE ABILITY TO ASSESS RELEVANT DATA TO COMPARE COMPETITIVE RATES OF OTHER INSURERS WHO PROVIDE SIMILAR BENEFIT COVERAGE; AND

WHEREAS, THE CALIFORNIA HEALTH AND HUMAN SERVICES AGENCY'S "LONG TERM CARE COUNCIL ANNUAL PROGRESS REPORT" DATED JANUARY 2002, CONCLUDED THAT THERE WERE "NO...NEW 'ALTERNATIVE' LONG-TERM CARE FINANCING OPTIONS...UNDER SERIOUS CONSIDERATION EITHER BY PUBLIC POLICY ORGANIZATIONS OR FINANCIAL INVESTMENT OR INSURANCE INDUSTRIES..."; AND

WHEREAS, THE CALIFORNIA HEALTH AND HUMAN SERVICES AGENCY'S "LONG TERM CARE COUNCIL ANNUAL PROGRESS REPORT" DATED JANUARY,2002, DID NOT RECOMMEND A SOLUTION TO THE PROBLEM OF CONSUMERS BEING UNABLE TO ACQUIRE NONCANCELABLE LONG-TERM CARE INSURANCE COVERAGE THAT IS NOT SUBJECT TO SIGNIFICANT PREMIUM INCREASES OR BEING UNABLE TO MAKE INTELLIGENT, INFORMED DECISIONS ON THE PURCHASE OF GUARANTEED RENEWABLE COVERAGE; NOW, THEREFORE, BE IT

RESOLVED, BY THE SENIOR SENATE AND, THE SENIOR ASSEMBLY, JOINTLY, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA AT ITS 2004 REGULAR SESSION, A MAJORITY OF THE MEMBERS VOTING THEREFOR, HEREBY PROPOSES THAT EVERY INSURER ISSUING LONG-TERM CARE INSURANCE POLICIES AND CERTIFICATES IN THIS STATE BE REQUIRED TO OFFER AT LEAST ONE NONCANCELABLE POLICY THAT IS ITS "BEST SELLING" GUARANTEED RENEWABLE POLICY AT A PREMIUM RATE THAT MAY NOT BE INCREASED THROUGHOUT THE TERM OF THE POLICY OR THE LIFE OF THE INSURED; AND BE IT FURTHER

 RESOLVED, THAT INSURERS AND THEIR AGENTS BE REQUIRED TO PROVIDE TO EACH POTENTIAL INSURANCE CUSTOMER A WRITTEN OR PRINTED RATE CHANGE HISTORY FOR THE GUARANTEED RENEWABLE POLICY THAT IS BEING MARKETED TO CONSUMERS; AND BE IT FURTHER

RESOLVED, THAT THE CALIFORNIA DEPARTMENT OF INSURANCE PROVIDE EASY ACCESS TO THE STATE'S CONSUMER RATE GUIDE OF LONG-TERM CARE INSURANCE; AND BE IT FURTHER

RESOLVED, THAT THE SENIOR LEGISLATURE OF THE  STATE OF CALIFORNIA RESPECTFULLY MEMORIALIZES THE LEGISLATURE AND THE GOVERNOR OF THE STATE OF CALIFORNIA TO ENACT APPROPRIATE LEGISLATION THAT WOULD ADDRESS THE CONCERNS SET FORTH IN THIS MEASURE; AND BE IT FURTHER RESOLVED, 

THAT A COPY OF THIS MEASURE BE TRANSMITTED TO THE SPEAKER OF THE ASSEMBLY, THE PRESIDENT PRO TEMPORE OF THE SENATE, AND THE GOVERNOR OF THE STATE OF CALIFORNIA.