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Pa. Rehabilitators File Plan to Aid Long-Term Care Insurer

The plan must be confirmed by a judge to go into effect—however a hearing date has not yet been set.
  • Lori Chordas
  • June 2020
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Rehabilitators appointed to manage the rehabilitation of Senior Health Insurance Company of Pennsylvania have submitted a plan to help save the long-term care insurer from liquidation.

Recognizing SHIP faces a substantial funding gap, the plan's aim is to increase revenues and reduce liabilities to narrow or eliminate that gap, according to the plan document. It will use a combination of policy modifications for most of the roughly 45,000 policies in force as of the filing.

Many policyholders have costly policies that provide far more coverage than the policyholders are reasonably likely to require, the document said. A key element of the plan is to allow policyholders to remove coverages that are not essential or even necessary, which will help narrow the funding gap and potentially reducing their premium, it said.


Once the court approves the notice procedure, the rehabilitation plan will be distributed to SHIP policyholders for comments or objections.

Patrick Cantilo
Cantilo & Bennett


Policyholders will choose either to pay increased premiums or receive reduced benefits through several options, wrote Joseph M. Belth, professor emeritus of insurance at Indiana University, in a blog post. Under the proposed three-phase plan, policyholders already on claim may elect to receive reduced benefits.

The first phase of the plan lays out recommendations that policies not in nonforfeiture status be evaluated and that policyholders be offered several options, Belth said. In phase two, SHIP's insureds are expected to be offered additional options, and in the final phase of the plan, the company will complete the runoff of policies, he said.

At year-end 2018, SHIP's liabilities exceeded its assets by $447 million, according to the company's statutory financial statement. By the end of last year's third quarter, the deficit grew to $524 million. SHIP was ordered into receivership by Pennsylvania regulators on Jan. 29. At the time Insurance Commissioner Jessica Altman filed a petition with the Pennsylvania court to place SHIP in rehabilitation, the company had about 51,000 policyholders and $2.2 billion in assets. Judge Mary Hannah Leavitt appointed Altman as rehabilitator. Patrick Cantilo, the co-founder and managing partner of law firm Cantilo &Bennett, was named by Altman as the special deputy rehabilitator tasked with managing the rehabilitation plan.

Cantilo filed the plan with the Commonwealth Court of Pennsylvania and the plan must be confirmed by Leavitt to go into effect. However, a hearing date has not yet been set. Once the court approves the notice procedure, the rehabilitation plan will be distributed to SHIP policyholders for comments or objections, Cantilo said.


Lori Chordas is a senior associate editor. She can be reached at lori.chordas@ambest.com.



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