California Gov. Jerry Brown, D., has signed state Assembly Bill 999, a long-term care insurance (LTCI) rate regulation bill that has been in the works for years.
State lawmakers signed off on A.B. 999 in August.
The insurer will have to show the commissioner either that its investment return "is lower than the maximum valuation interest rate for contract reserves for those policies," or that retroactive changes in laws or regulations have justified a change in interest rate assumptions, according to the bill text.
The law based on A.B. 999 also would limit the ability of an LTCI carrier to use the claims for one group of policyholder to justify a rate increase request. An insurer would have to use the experience for all similar LTCI policy forms issued and retained by an insurer and its affiliates to justify requests for rate increases.