OLYMPIA – Insurance coverage Commissioner Mike Kreidler has ordered the bancrupt Senior Well being Insurance coverage Firm of Pennsylvania (SHIP), of Pennsylvania, to right away cease soliciting signatures from Washington’s 1,200 plus policyholders, as neither the premium will increase nor advantages modifications have been permitted by Kreidler’s workplace, as required by state regulation.
SHIP’s appointed rehabilitator despatched letters to policyholders in Washington and different states containing a “Protection Election Bundle” that requires they select a diminished profit or premium improve by March 15, 2022, with an efficient date as quickly as April 1. Neither the premium will increase nor advantages modifications have been permitted by Kreidler’s workplace, as required by state regulation.
SHIP bought long-term care insurance coverage insurance policies to seniors all through Washington. The financially troubled firm was positioned into rehabilitation by Pennsylvania’s Commissioner of Insurance coverage in January 2020. A rehabilitation plan for the corporate was permitted by the Pennsylvania Commonwealth Courtroom in August 2021. Kreidler, together with commissioners from Maine and Massachusetts, appealed the rehabilitation plan, claiming it was unfair to policyholders. Their attraction is pending earlier than the Pennsylvania Supreme Courtroom. Twenty-seven different insurance coverage regulators signed an amicus transient in help of the attraction.
Within the meantime, any SHIP policyholder who has already acquired a Protection Election Bundle from SHIP should choose an possibility and postmark their response to the corporate by March 15 in the event that they need to maintain the diminished coverage.
“I am hopeful the Pennsylvania Supreme Courtroom will see the details of this case and grant our attraction,” stated Kreidler. “The common SHIP policyholder is 86 years outdated. It is vital they’ve the best choice potential within the face of this firm’s demise. The rehabilitator’s plan places the burden of filling a $1.2 billion funding hole totally on aged customers who put their religion within the firm to be there after they wanted them.”
Particular person states have the only authority to approve or deny charges and kinds for firms doing enterprise of their jurisdiction. Kreidler and the opposite objecting regulators imagine the rehabilitation plan disproportionately places the burden of the corporate’s insolvency unfairly onto policyholders and ignores their rights beneath states’ warranty fund associations. State assure associations are arrange in every state to pay claims when an insurer is positioned in liquidation. Washington’s warranty affiliation pays claims as much as $500,000 for a policyholder of a liquidated insurer. This offers some restricted safety for policyholders however is not any panacea. SHIP won’t recuperate from its monetary insolvency, however liquidating the corporate and triggering the states’ assure associations will offset a number of the influence on policyholders. The rehabilitator letter directs SHIP policyholders to pick one in all 5 protection choices, with an accompanying premium change:
- Downgrading your coverage
- Changing to a fundamental coverage
- Changing to an enhanced fundamental coverage
- Changing to an enhanced paid-up coverage
- Retaining your present coverage
However two of the choices—downgrading your coverage and protecting your present coverage—promote that the Most Lifetime Profit is “limitless.” Kreidler’s workplace discovered this declare to be deceptive at greatest, as a result of the corporate won’t have the funds to satisfy this promise. The package deal additionally requires policyholders to attest that any choice they make is voluntary, nevertheless if somebody doesn’t choose an possibility, one is made for them.
“Provided that the March 15 deadline is pending, and we can’t look ahead to the courtroom to resolve, I am encouraging all SHIP policyholders who’ve acquired discover from the corporate to make the very best resolution they’ll for their very own state of affairs,” stated Kreidler. “If you happen to’re confused by the discover you have acquired, contact your agent or file a criticism with our workplace.”