The New York State Department of Financial Services (DFS) today released a report, initiated by Superintendent Harris earlier this year, analyzing the long term care (LTC) insurance market. The market nationwide is in crisis due to historical mispricing, which has led to ever-increasing premium rates and insurers leaving the market.  

Since LTC insurance first became available in New York State in 1988, other than a period of stability after initial introduction, the market has struggled. The number of New Yorkers who have LTC insurance policies today is roughly half of the peak. Approximately 394,000 New Yorkers have policies as of 2020, compared to 754,000 in 2002. Only a fraction of the insurers that sold LTC policies in New York still do so today, and several of those that remain face financial instability.  

“Since I joined DFS, I have begun to transform the Department as a data-driven regulator. To fully understand the current long term care market challenges, we analyzed historical data, conducted key stakeholder interviews, and assessed the impacts of past actions,” said Superintendent Harris. “In the spirit of transparency, I am making the Department’s findings public, a critical step to address long term care insurance challenges to benefit New Yorkers.”  

The report identifies several issues that contributed to today’s nationwide crisis. Insurers’ ability to initially price LTC policies accurately was hindered by a lack of historical claims data and because claims were often made decades after the original premiums were established.  Furthermore, when LTC insurers first sought approval from regulators, including the New York State Insurance Department (the predecessor to DFS), to significantly increase premium rates, regulators were reluctant to take action that could have increased rates or diminished benefits for policyholders who had purchased coverage as part of their long term care planning.  

The report specifies that DFS will review and reform premium rate approval methodologies; establish affordability measures to help consumers manage rate increases; and promote the adoption of LTC insurance offerings in New York State.  

Additionally, Governor Hochul and the New York Legislature have already taken essential action to protect New Yorkers with long term care policies. The recently enacted state budget includes the establishment of a Health Guaranty Fund, a basic safety net used to protect consumers when and if their insurer becomes insolvent.  

In preparing this report, DFS reviewed a wide range of sources, including scholarly, industry, and regulatory agency publications; LTC insurance market research studies; and historical LTC insurance premium rate filings in New York. DFS also surveyed certain DFS-licensed insurers that offer LTC insurance policies in New York and reviewed documents relating to these insurers’ past applications, including information upon which the insurers relied to support those applications, such as actuarial studies and marketing materials.  

Read the Long Term Care Report on the DFS website.