The Delaware Insurance Department launched an investigation Thursday into whether insurers exceeded set policy rate increases for a type of insurance widely held by senior citizens.

Insurance Commissioner Matt Denn said some companies promised customers one annual rate and later increased prices as much as 40 percent for long-term care insurance, which covers a wide range of services, including costly stays in nursing homes and assisted-living facilities.

Long-term care insurance providers are required by law to promise a set rate increase on the front of a policy and stick by it, Denn said. Companies can be fined as much as $10,000 for overcharging policyholders. Denn said his office will review all rate increases in long-term care policies over the last two years.

A 65-year-old policyholder would likely pay between $2,000 and $2,500 a year in long-term care insurance, Denn said. But he added that it is difficult to pinpoint the average cost of a policy because that figure depends on a person's age, health and the type of benefits purchased. Policies usually reimburse the insured for long-term care expenses up to a fixed amount, such as $100 or $150 per day, according to the AARP.

Penn Treaty/Network American Life Insurance Company was denied its request for rate increases ranging from 29 percent to 43 percent for Delaware policyholders. AIG Life Insurance Co.'s request for a 25 percent increase was also rejected.

Kelly Mauer, an AIG customer service representative, said policyholders were sent a rate increase letter that listed projected administration expenses and investment results as reasons for the cost hike.

Each state's insurance department had to approve or deny AIG's request. Delaware denied the increase, so AIG policyholders in the state will not see their long-term care insurance rates go up.

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