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Long-Term Care Insurer Dumps 140,000 Policies on State's Doorstep
- December 5th, 2008
Conseco Inc., a major long-term care insurer, has transferred more than 140,000 of its policies to an independent trust set up by Pennsylvania, putting the policyholders at risk.
Conseco moved its Senior Health Insurance Co. long-term-care policies, which were underpriced, to a new state-supervised nonprofit trust, Senior Health Insurance Co. of Pennsylvania. The trust will pay claims from a pool of funds, including $175 million in capital, transferred to it by Conseco, the Wall Street Journal reports.
But the trust has no access to additional capital and may need to raise rates and reduce benefits. If the trust were to become insolvent, the Pennsylvania state guaranty association would pay claims, but only up to its own limits.
Although Conseco is headquartered in Carmel, Indiana, its Senior Health unit was based in Pennsylvania, making it subject to that state's regulators. Senior Health stopped selling new policies in 2003, but holders of existing policies are spread out around the U.S.
To read the Wall Street Journal article, click here.