Aflac Adjusts Premiums Amid Virginia Investigation on Health Policies

An extensive review by the State Corporation Commission Bureau of Insurance revealed that American Family Life Assurance Co. (Aflac) has been charging excessively for certain supplemental health policies in Virginia. Consequently, the company revised premium rates on 16 policies, with reductions reaching up to 35%, as per their filed reports with the bureau. These adjustments will save over 120,000 policyholders in Virginia approximately $12.6 million annually. Additionally, Aflac agreed to pay a $64,000 fine to resolve the issue. Commissioner Scott White commented, "This represents exactly the type of oversight work the Bureau of Insurance does every day to protect Virginia consumers.” Upon discovering that these supplemental products did not offer commensurate value to policyholders, the bureau facilitated a process to lower premiums, resulting in tangible savings for the consumers. The investigation began with routine market analysis, where bureau staff examined six Aflac policies offering coverage for injuries, cardiac care, and hospital bills. Four policies were deemed overpriced as they did not meet acceptable pricing criteria, with a low percentage of premiums paid out as claims—the loss ratio. When a loss ratio falls below a certain threshold, it indicates possible overpricing of premiums. Further inquiry uncovered that 16 supplemental policies maintained loss ratios below the necessary minimum. These included policies offering dental, vision, and short-term disability benefits. According to Virginia regulations, such policies must have a minimum loss ratio of 50%. Yet, many Aflac policies reported loss ratios averaging between 30% and 35% since 2019, with a “dread disease” policy showing a loss ratio as low as 14% in a single year and averaging 23% from 2019 through 2024. In response, Aflac reduced premiums for the “dread disease” coverage by 35%, lowering the average annual cost to $159, and decreased rates for dental and vision policies by 20%. Current laws stipulate that supplemental health policies should achieve minimum loss ratios, with Affordable Care Act policies set at 80% and Medicare Supplement coverage requiring a 65% ratio. Thomas McDaniel, Aflac's senior vice president, noted that the adjustments and fine are part of a settlement without admitting to any legal infractions. The company reaffirmed its commitment to ensuring policyholders receive due benefits and emphasized ongoing collaboration with state regulatory bodies to meet all requisite standards.