Breaking, to be updated
Dec. 29 — Three state regulators filed an appeal in the Supreme Court of Pennsylvania Dec. 27th against the amended rehabilitation plan for insolvent long term care insurer Senior Health Insurance Company of Pennsylvania. They were joined by a whopping 27 state regulators as amici to the case, demonstrating that well over half of U.S. states oppose the novel plan.
Three of the four National Association of Insurance Commissioners‘ incoming officers for 2022, President Dean Cameron, Vice President Andrew Mais, incoming Secretary-Treasurer Jon Godfread, North Dakota, are included in their opposition to the plan as amici. Several are former NAIC presidents with years, if not decades, of service in state regulation.
The case is could potentially tee up a united opposition from 30 state attorneys general if the rehab plan goes into effect because the intervening appealing states charge that the plan “overrides individual states’ regulatory authority over premium rates” charged on policies issue in those states.
If the appeal fails, the plan is expected to go live in April 2022, once policyholders mail back their choices by March from among the menu of options given in the rehab plan. Once the rehab plan tries to institute rates in other states, the state AGs would be prompted to act, potentially, as the opposing jurisdictions beleive this rate action would violate state laws.
For many of these regulators, SHIP’s rehab plan threatens one of the foundations of state insurance regulation, the authority of the states to set and approve their own rates for their state-licensed insurers.
The states of Maine, Massachusetts and Washington State and the amici are claiming that the lower court erred in approving the plan, that it places the burden of insolvency solely on the policyholders in violation of statute and disregards the best financial interests of policyholders and the state guaranty system, among other things.
The three states, who previously intervened in the case in lower court, argue that the rehab plan “disregards the long-standing state-based system for approval of insurance rates and instead imposes rates set by the rehabilitator and approved by the Pennsylvania Insurance Department and the Commonwealth Court. They said they were not aware of any plan that has tried “to supersede state rate regulation and set rates payable by policyholders in other States without review and approval by the insurance regulators of those States” in their appeal.
“The Plan fails to minimize the harm to policyholders, and it certainly appears that the Rehabilitator’s goal is solely to reduce SHIP’s deficit before it is placed into liquidation which is wholly inconsistent with the goals and purposes of there habilitation process,” the 27 amici states said in their brief, filed Dec. 22.
“The rate increases under the Plan are extreme, in some cases more than double the amount of the current premium.This can be expected to force unnecessary policy lapses for elderly policyholders who have paid premiums for many years in contemplation of the need for long term care,” they wrote.
These opposing states favor liquidation and the triggering of the state guaranty funds to help cover SHIP’s deficits to policyholders. The rehabilitators have successfully argued thus far in state court that their plan gives policyholders more flexibility for chooses. No matter which way it is slice, policyholders face a reduction benefits nad/or soaring premium increases.
As of Dec. 31, 2020, SHIP had total assets of $1,369,908,000 and total liabilities of $2,592,415,000 with a negative capital and surplus of $1,222,507,000. Thus, SHIP’s deficit or “funding gap” is $1.2 billion. The Commonwealth Court approved the rehab plan, led by Commissioner Jessica Altman, in August 2021 and again, more formally, in September. Altman first filed a petition for SHIP’s rehab in January 2020, and the lower court placed it in rehabbing an order that month, awaiting a plan.
The three state insurance regulators appealed to the Supreme Court on Sept.21, 2021 and in early October, applied for a stay pending appeal. The Commonwealth Court denied the appeal and the stay, but a November request for a stay to the state Supreme Court is still pending.
A response from the Pennsylvania Insurance Department, as rehabilitation, is pending.
The 27 Departments of Insurance of the Amici Curiaei insurance regulators are, from the document are below.
ALAKSA, DEPARTMENT OF COMMERCE, COMMUNITY, AND ECONOMIC DEVELOPMENT, BY
LORI WING-HEIER, DIRECTOR
ARIZONA DEPARTMENT OF INSURANCE AND FINANCIAL INSTITUTIONS, BY EVAN G. DANIELS, DIRECTOR
ARKANSAS INSURANCE DEPARTMENT, BY ALAN MCCLAIN, COMMISSIONER
CONNECTICUT INSURANCE DEPARTMENT, BY ANDREW N. MAIS, COMMISSIONER
DISTRICT OF COLUMBIA DEPARTMENT OF INSURANCE, SECURITIES, AND BANKING, BY
KARIMA M. WOODS, COMMISSIONER
INDIANA DEPARTMENT OF INSURANCE, BY AMY L. BEARD, COMMISSIONER
IDAHO DEPARTMENT OF INSURANCE, BY DEAN L. CAMERON, DIRECTOR
DOUGLAS M. OMMEN, INSURANCE COMMISSIONER OF THE STATE OF IOWA
LOUISIANA DEPARTMENT OF INSURANCE, BY JAMES J. DONELON, COMMISSIONER
MARYLAND INSURANCE ADMINISTRATION, BY KATHLEEN A. BIRRANE, COMMISSIONER
MISSISSIPPI DEPARTMENT OF INSURANCE, BY MIKE CHANEY, COMMISSIONER
NEW HAMPSHIRE DEPARTMENT OF INSURANCE, BY CHRISTOPHER R.NICOLOPOULOS, COMMISSIONER
NEW JERSEY DEPARTMENT OF BANKING AND INSURANCE, BY MARLENE CARIDE, COMMISSIONER
HON. RUSSELL TOAL, SUPERINTENDENT OF INSURANCE FOR THE STATE OF NEW MEXICO
NORTH CAROLINA DEPARTMENT OF INSURANCE, BY MIKE CAUSEY, COMMISSIONER
NORTH DAKOTA INSURANCE DEPARTMENT, BY JON GODFREAD, COMMISSIONER
OHIO DEPARTMENT OF INSURANCE, BY DAVE YOST, ATTORNEY GENERAL
OKLAHOMA DEPARTMENT OF INSURANCE, BY GLEN MULREAY, COMMISSIONER
TROY DOWNING, MONTANA COMMISSIONER OF SECURITIES AND INSURANCE AND STATE AUDITORRHODE ISLAND DIVISION OF INSURANCE, BY ELIZABETH KELLEHER DWYER, SUPERINTENDENT
SOUTH CAROLINA DEPARTMENT OF INSURANCE, BY RAYMOND G. FARMER, DIRECTOR
SOUTH DAKOTA COMMISSIONER OF INSURANCE, BY LARRY DEITER, DIRECTOR
UTAH INSURANCE DEPARTMENT, BY JONATHAN T. PIKE, COMMISSIONER
VERMONT DEPARTMENT OF FINANCIAL REGULATION, BY KEVIN GAFFNEY, DEPUTY COMMISSIONER
WEST VIRGINIA OFFICES OF THE INSURANCE COMMISSIONER, BY ALLAN L.MCVEY, COMMISSIONER
WISCONSIN OFFICE OF THE COMMISSIONER OF INSURANCE, BY MARK AFABLE, COMMISSIONER
WYOMING DEPARTMENT OF INSURANCE, BY JEFFREY P. RUDE, COMMISSIONER