The injunction will prevent SHICP from hiking rates and cutting benefits for Louisiana policyholders until the 19th Judicial District Court issues its final ruling on whether the company can bypass Louisiana’s authority to set coverage terms and premiums charged to its residents. A final decision in the case is likely to be issued later this year. A similar ruling was issued by a South Carolina court for policyholders in that state.
“Pennsylvania’s plan to force Louisiana policyholders to pay for SHICP’s failure through rate increases and benefit reductions is totally without precedent in insurer failures and strips guaranty fund protection from innocent policyholders,” said Donelon. “The injunctions in Louisiana and South Carolina show there is real nationwide momentum for correcting this disastrously improper use of a rehabilitation proceeding.”
On Feb. 8, Maine Insurance Superintendent Eric Cioppa issued a Cease and Desist order against SHICP and scheduled a public hearing for Feb. 18 to consider whether the order should stay in place, according to a Maine Bureau of Insurance press release. The emergency C&D order blocks execution of the SHICP rehabilitation plan in Maine.
Pennsylvania Insurance Commissioner Jessica Altman will step down from her post on Feb. 25, according to a Feb. 15 announcement from Gov. Tom Wolf. The department’s chief of staff, Mike Humphreys, will serve as acting insurance commissioner following her departure. Altman was named acting insurance commissioner in August 2017 and was unanimously confirmed by the Senate in 2018.
“The most egregious aspect of Pennsylvania’s plan is that it would deprive 30,000 SHICP policyholders across America, who are on average 86 years-old (premium paying) and 89 years-old (drawing benefits), of their access to $800 million of guaranty fund protection in place in all 50 states that could be used to cover two-thirds of SHICP’s losses,” Donelon said.
Ominously looming in the background of the discussion on SHICP is the state of long-term care insurer Genworth, which has about 10,000 policyholders in Louisiana and over 1.1 million nationwide, LDI said in the news release. Genworth Life Insurance Company, which has most of Genworth’s long-term care policies, has been rated a C++ Marginal by AM Best, so the SHICP rehabilitation litigation could have broad implications for Genworth policyholders down the road.