Class Action Claims Continental Casualty Co. Broke the Rules By Unevenly Increasing Long-Term Care Premiums

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Continental Casualty Company has not honored its contractual promise to not increase long-term care insurance premiums for policyholders unless the amounts are changed uniformly for everyone within the same age group, a proposed class action alleges. 

When an insurance policy stipulates that premiums will not be increased unless they’re to go up for everyone in the same age group, an insurance company may not increase premiums at different times, and in different amounts, for people within that age group, the 22-page lawsuit begins. Similarly, an insurer must not promise that it will change premiums only by age group or premium class when the company is aware that it will in fact vary future premium bumps from state to state, the complaint says. 

The lawsuit alleges defendant Continental Casualty Company has “broken these rules” for those covered by Wells Fargo & Company’s long-term care group policy, in particular by imposing rate increases “at different times and in different amounts from one state to the next.” As a result, insureds, particularly those who’ve paid for long-term care insurance to cover costs of assistance related to disability or old age, within an age group find themselves paying entirely different premiums from one another, even though they exist within the same age group, premium class and risk pool, the suit says. 

The case calls Continental Casualty’s alleged decision to sporadically seek and implement premium increases from one state to another a blatant violation of its contractual promises. Per the lawsuit, Continental Casualty “knew its promises of uniform rate increases were false” given the variance in state regulatory requirements. 

“Plaintiffs’ rates have increased by 45.475%, an increase far greater than rates charged insureds in other states,” the suit claims. 

Premiums for long-term care coverage are generally set at the same level for a given age group, the suit says. Those who buy the coverage are assured that by purchasing long-term care at an early age, they’ll secure a more favorable premium than they could otherwise obtain over the coming years, the case relays. Long-term care coverage, overall, affords peace of mind in that insureds, by paying a fair and reasonable premium over the long run, will be protected against the sizable costs of assisted living and other long-term care should they need it, according to the case.

As the lawsuit tells it, however, insureds, by and large, have not had a great experience in dealing with the long-term care insurance industry:

“Insureds lured in by the promise of affordable premiums early in life have faced massive premium increases, with rates sometimes even doubling in a few years. Rather than obtaining peace of mind, these insureds suffer with the uncertainty of future premium increases, the risk of long-term care expenses that could arise, and the unavailability of affordable coverage alternatives now that they have reached a more advanced age.” 

Per the complaint, drastic premium increases are “no accident” in that insurance companies, disappointed in the performance of their long-term care risk pools, have sought to shift the burden of their losses onto their insureds. 

“And as the facts of this case demonstrate, insurers are determined to protect their bottom line, regardless of their promises or the impact on an aging population that relied upon Continental’s promises of financial stability,” the lawsuit scathes. 

The plaintiffs, Wells Fargo long-term care policyholders from Texas and Arizona, seek through the lawsuit the rescission of their and proposed class members’ insurance contracts and the restoration of premiums paid for such. In the alternative, the plaintiffs seek declaratory and injunctive relief, disgorgement of allegedly ill-gotten gains, and compensatory, statutory and punitive damages.

The lawsuit looks to represent all individuals who bought or are insured under a Continental Casualty Company group policy for long-term care coverage delivered in California, whose group policy either states or was marketed using material that states that premiums will not increase unless they also increase for all other insureds or all other insureds in a premium class, age category or other specified category. 

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