Last month there was something unusual: a good-size American insurance company, Pen Treaty of Allentown, found. Was ordered to end his cases. It will be the orphan of thousands of policyholders – those who have bought long term care insurance to protect their family from crushing the cost of nursing homes.
Large insurance companies rarely fail in the United States. Most of the time, a sick insurer quietly searches for a buyer, and his helper disappears under the branch. Policyholders can not know what happened or care till their claim is paid
Due to the lack of visual insurance failures it seems that the squadron has the right to the industry and the regulators will always get the right things, accurately measure the complex risks and cover the premium claims.
But the failure of the pen treaty shows that it was not really true. It works for a regulated insurer without fixing the mistake of estimating its book of business for many years, and finally leads to policyholders in the area of damage and uncertainty, which is specially designed to avoid insurance has gone.
Now, there is some fear, the failure of the Dan compromise is a sign of more trouble coming to the area of long-term care.
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“Consumer is rare, but it sometimes happens in bushes,” said Robert Hunter, director of insurance for the US Consumer Union. Since the beginning of 1990, the organization is warning about problems related to long term care insurance. In a nutshell, companies underestimate the actual cost of coverage and are now struggling to make good on all their promises
He said, “Definitely it is a matter of fact that there is still a high risk situation for some companies”. “This is not a healthy situation.”
Michele Leonard, a pen joint holder in Venus, Flay, said that he was shocked to know about liquidation.
He said, “I have the time for the convenience of living in my days,” she said, she explained that she has already chosen a group house, has submitted an application and it has been accepted (but she is now Have not sold their home till). “They can not take me anymore, I can not have enough property to go to.”
To protect the policyholders in insurance failures, each state has a so-called Guarantee Fund. Funds paid people’s claims, up to the predetermined extent by the state. There is a limit of $ 300,000 in Florida
“But how long does it take?” Ms Leonard thought. He said that he has not yet heard from the guarantee fund, but said that he had asked the post office to complete payment of monthly premium, even if it grows, or his coverage will be canceled.
“Hey, we’re going under the toilet but keep paying your premium,” she said, joking the letters. “It’s very upset.”
The other pen agreement customers agreed. Policyholder Charlie Sproule, in Harrisburg, PA, said, “That’s why we have CPA and actuaries and insurance professionals – to run the business properly.” In my opinion, actuaries and executives and boards should be legally liable for it, but they will not do that they will get Scott-Free. ”
In Pennsylvania, the guarantee limit is also $ 300,000 Mr. Spoule said that the cash value of his policy is nearly double – $ 573,000 so there is a separate value of a separate policy organized by his wife Mary Law.
Mr. Sprawoul said that his mother turned 100 years and spent his last year at the nursing home. Care was costly to erase all of their properties in just three years, including the value of their home. After that, he had to go to the government health program for Medicaid, the poor.
“That’s why we bought insurance so that all our property will not be messed up with the nursing home cost,” said Mr. Sproule.
In liquidation, the policy will be canceled, and the guaranteed fund will take care of claims of $ 300,000. “We end up suffering about a 48 percent loss,” said Mr. Sproule. It increased the value of its policy to $ 573,000 for 18 years. Mr Sproull said that he was too late to make sure that they buy coverage to change what they have lost.
“We’re probably indispensable,” he said. “When you are young and healthy, you buy long term insurance, because you pay less premium.”
They were also encouraged by an association funded program in which States urged residents to purchase long-term care insurance. The goal was to prevent Medicaid from being dominated by the generation of millions of aging children.
Sproules, Ms. Leonard and all other pen jointly have been spent in strange legal confinement in the past nine years by policyholders. In Pennsylvania, state insurance regulators filed a petition in 2009 for liquidating the Commonwealth Court of Pennsylvania, which is a standard procedure.
But then the standard playbook went out of the window. The heap of insurance agents challenged the petition in the court. This is the reason that till the pen asset will not be out of liquidation, they will continue to receive their sales commissions, according to which they said that they are entitled to constitutionally.
Health insurers also fought for liquidation, the state guarantee fund, it is revealed, are not funded at all. When under an insurance company, in that line of business, all living companies require a guaranteed chip in the guarantor based on their market share.
Long term care insurance is classified as health insurance, so the health insurers will get an evaluation – even those who have clear operation of long term care insurance and never have a policy sold. They were very frightening when paying for other people’s mistakes
Some suspected opposition parties came from the corporate parent of the pen treaty, the pen treaty American corporation Friso, Tex. Its Chief Executive Officer, Eugene J. Vojniki said that the insurer is viable and if only for this the state insurance regulators will increase the rate of adequate admission to the court, they specifically blamed the Pennsylvania Insurance Department.
He said in an interview, “The commissioner believes”. “He can decide that he thinks that is right and not a challenge.”
In this case, the financial problems of the PEN treaty are for at least 2001, when the company claimed that its claims were higher than expected, officials worked with regulators on a “Corrective Action Plan”, including fresh capital, reinsurance And there was a series of rate hikes involved. But the insurance rates have been approved by the state by the state, and provide some definite increase, while others (including Pennsylvania) did not.
“This case presents a serious indictment of the current rules of long term care insurance,” Judge Mary Hannah Leivitt said in a 2012 opinion, refusing to increase the rate, Pennsylvania “showed that rate regulation is governed by politics, actuarial No evidence or legal theory. ”
There can be a lost cause in the 2001 rehabilitation scheme, but there are gradually things in this corner of the insurance business. While the troubles of the Pen Treaty increased, its offshore insurance deals gave it a form of general condition. In Dublin, the amount of more than $ 1 billion in the liability of the largest penal treaty balance sheet with the reviewer was removed, so that the bustle remained strong despite the corrective action plan.
And then, in the financial upheaval of 2008, the Penn Pact and its Irish reinsurance had fallen out. The Pen Treaty had to withdraw the liabilities of $ 1 billion, leaving a hole in its balance sheet. It was the beginning of the end one year later, the Pennsylvania Insurance Department said that the situation was irreversible and the court asked for a liquidation order.
The insurance department spokesman, Ron Raman said, “This was the best option” “The company was not viable, and it would provide maximum protection to consumers under the law.”
But before the court nine years ago, Judge Levit ordered liquidation in March, during that time, the financial condition of the Pen Treaty had further declined and for nine years, policyholders did not know whether their insurer was dead Is or is alive – but keeping those letters instructed them to pay their monthly premium or they will lose everything.
Policyholders who have already gone to nursing homes or other care facilities had their claims paid in the entire proceeding.
But those who do not make this move yet, such as Ms. Leonard, will have to suffer loss in some cases. They are waiting now to hear how many states have estimated Guaranty Fund relief in some $ 100,000. Others like California and Connecticut guarantee $ 500,000 and more, New Jersey has no limit, but some analysts have questioned that in particular if a large long-term care insurer fails.
Ms. Leonard, a retired member of the Faculty of Nova Southeastern University, said, “I’m sure I would call someone else: we’re all confused.” He said that he had asked for an update on the proceedings of a nine-year court, but thought it was a class-action lawsuit. He was surprised to know that it was something else
“If this was not a class-action suit, why was not it?” he said. “Class-action suits need to be done, I think they should be made an example of them and respect them.
Source: Best Home Insurance UK