Monday, October 5, 2009

What's the petition filed to liquidate Penn Treaty mean in Washington?

The Pennsylvania Insurance Department filed petitions on Oct. 2 to liquidate both Penn Treaty Network America and its subsidiary, American Network. Pennsylvania Insurance Commissioner Joel Ario said that based on his office's analysis, the companies "do not have the ability to pay future claims without significant rate increases that would have to be requested and approved in all 50 states."

Together, the companies provide long-term care insurance to more than 120,000 policyholders in all states and the District of Columbia.

Washington state has about 3,700 Penn Treaty policyholders and no known American Network policyholders.

Ario's office says that if the court approves the petition, any active long-term care policies "will not be canceled, except by the policyholder" and will instead be transitioned to state guaranty funds, which cover policyholder claims up to coverage, which varies by state.
The details are spelled out in the liquidation petition memos (Here's Penn Treaty's, and here's American Network's). Penn Treaty's, for example, says that further efforts to rehabilitate the company's finances "would substantially increase the risk of loss to policyholders" and would, in fact, "be futile."
Here in Washington, we put up this web page to talk about the effects on Washington policyholders, how the liquidation process works, and what policyholders can do.