Sandy K. of Freeport, who turned 75 in February, celebrated that milestone with her children and grandchildren. She and they were "quite glad" she had attained that age, she wrote. But she added, "Too bad the insurance companies do not feel the same way."
Here's why. In August, Sandy, a retired computer troubleshooter, received a bill for the renewal of her optional umbrella liability insurance policy from Allstate and was shocked. Her insurance premium - for the same coverage as the previous year - had increased by 55 percent, from $280.17 to $433.72. And when she called Allstate to find out why, she said she was "told it was increased simply because of my age."
Sandy K. said, "This increase was based not on poor driving accidents or anything negative other than I have the good fortune to age." And in a letter to New York Attorney General Andrew Cuomo, she asked if the higher premiums constituted age discrimination.
Beth Frank, of Cuomo's office, replied that while Sandy may consider the increase improper, no antidiscrimination laws were broken.
Allstate case worker Betty Bentivegna in Northbrook, Ill., confirmed in a letter to Sandy that her age was the reason for the premium increase. The policy premium was based on the same information as last year, Bentivegna wrote, "with the exception of a 75-or-over driver." She added, "Allstate files its rules and rates within each state, and these filings have been approved."
Curiously, Sandy's auto insurance premium did not increase - indeed it was reduced, because her driving record was clean, said a spokeswoman in Allstate's Long Island office. Only the optional umbrella liability policy premium was raised. Why? Because she drives and she turned 75, the spokeswoman told me. I asked what an umbrella policy has to do with a driver's age.
Auto and umbrella policies "are separate policies with different rating classifications," she explained.
I asked the state Insurance Department, the agency that approves increases, if Sandy K. is a victim of age discrimination. Spokesman Andrew Mais wrote that New York law "prohibits age discrimination in underwriting practices," which refers to "accepting, rejecting or terminating policyholders based upon the advanced age of the insured." But, he added, insurance companies may use age as a reason to raise rates, and that would affect both older and younger individuals.
What if raising the price is a way of forcing a person of age out of a policy? "We follow the law," Mais insisted. Sandy K. told me, "Just because he thinks it's legal doesn't make the situation right."
George Nager, 85, and his wife Pauline, of Levittown, did more than complain when they were outraged that their Long Term Care Insurance carrier had raised their premiums by 12 percent. The Nagers are lawyers and, with other policyholders, they filed a freedom of information suit last month in State Supreme Court in Mineola to force the state Insurance Department to open its files and explain why it granted the increase. The state had declined their repeated requests, claiming that much of the information is proprietary.
The Nagers purchased their long-term care insurance policies in 1998 from GE Capital, whose policies were taken over in 2006 by Genworth Life Insurance Co. of New York, based in Lynchburg, Va. In June, Genworth notified Nager and his wife that the premiums for their policies, which were several thousand dollars a year, would increase by 12 percent. The state Insurance Department had granted the increase in May, its records show, without notifying or hearing from policyholders on the merits of Genworth's request.
In a letter to state Insurance Superintendent Eric Dinallo, Nager said such an increase would be a hardship on older people who were counting on long-term care insurance policies to protect them if they needed nursing care. Pauline Nager pointed out that many such policies were sold under the state's Partnership for Long-Term Care insurance, which is designed to provide affordable insurance and keep the elderly from using Medicaid as a first resort. The premium increase undermines the program, she said.
George Nager acknowledged that when he bought the policy, he was told that premiums could be increased. But he was assured by the sales representative that GE had not raised its premiums since 1974, that his policy contained a guarantee against cancellation as long as he paid the premiums and that they could not be raised for an individual, but for a "class." There was the rub that many policyholders may not understand.
If you are part of a group of policyholders from New York, for example, that bought their policies in June 1998, at a certain premium, you could be considered part of a "class" and the premiums of people in that "class" may be increased. It's not surprising that Nager was unclear about this possibility. Even Jesse Slome, director of the American Association for Long Term Care Insurance, was unfamiliar with the definition of class until he consulted with insurers at my request.
"Some companies define class in their policies," he said. "A class could be viewed as anything by which premiums vary ... age, state, sex, benefit options." Nager and others who have joined in the suit insisted in their complaint to Dinallo that their class had not changed and that their policies were "guaranteed renewable." But Earl S. Klayman, supervising actuary of the state Insurance Department's Health Bureau, explained that "guaranteed renewable" simply means the policy cannot be canceled as long as the premiums are paid. "However," he added, "the insurer has the right to raise the premiums as long as this is done on an entire class of policies and not because an individual has a claim."
The Nagers' suit seeks the details behind the decision to grant the increase, especially the financial information to justify the company's request for the raise. Klayman said such raises are designed to make sure insurers have sufficient reserves to pay claims. And he said his department has denied most of the raises requested by insurers. But the department's Web site shows only the 29 increases that have been approved in the past four years, ranging from 8 to 20 percent.
Mais, the state Insurance Department spokesman, declined to comment on the suit, which is to be heard next month. Stay tuned. And let me hear about your insurance frustrations.
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