BATON ROUGE – Louisiana Insurance Commissioner Jim Donelon has said he will take legal action to stop a “rehabilitation” plan for an insolvent out-of-state insurance company that sold policies long-term care for elderly Louisianans.
Donelon said the plan presents an unreasonable choice for vulnerable residents who have paid their premiums: “potentially disastrous rate increases or benefit cuts.”
The Senior Health Insurance Company of Pennsylvania (SHIP) was bought out by Pennsylvania insurance regulators last year after recording a loss of $ 466 million and could no longer meet its mandatory capital requirement.
âWhen this happens, insurance regulators are required to take control of an insurer for the protection of policyholders and creditors,â the Pennsylvania Insurance Department noted.
Donelon said Monday the company had a deficit of $ 1.2 billion.
Rather than face liquidation, where the assets of a missing company are sold and police claims are bailed out, regulators in Pennsylvania have chosen to rejuvenate the ailing insurance company in accordance with a court-approved plan. of State.
The 195 recently approved pages proposal aims to “reduce or eliminate” SHIP’s funding gap against most of its 39,000 policies.
Donelon, however, called the plan a “pro-insurance proposition” that would raise rates by up to 500% or dramatically cut benefits for those who need them most.
âThe situation is untenable for insureds in Louisiana,â Donelon said. “Despite purchasing long-term care insurance to ensure their independence in old age and paying their policies protected by state guarantee funds for decades, they are now at risk – in middle age age 86 – to be forced into bankruptcy and exonerated from current life situations.
Twenty-two other states also oppose the Pennsylvania-negotiated plan, which bypasses the insurance departments of states that once allowed SHIP to sell long-term care and home health care insurance products.
Donelon said he would seek an injunction in Louisiana state court to prevent the rehabilitation plan from taking effect.
“I will do everything in my power to protect these Louisiana consumers from a change in guarantee fund protection rules at a time of need by a regulator in Pennsylvania,” he said. he declares.
The Louisiana Department of Health had previously sought an injunction in federal court, but the case was dismissed because the plan had not yet been approved.
By William Patrick for Place du Center