The Guardian Life Insurance Company of America announced Friday that it would be exiting the long-term care insurance (LTCI) market as of the end of 2011. Although no new policies will be sold after the end of the year, all existing policies will remain in force, and are guaranteed renewable as long as premiums are paid.
Gordon Dinsmore, president of Berkshire Life Insurance Company of America, the Guardian subsidiary that underwrites and issues its LTC policies, said in an interview that the company had not been in the business of LTC for a very long time—it entered the LTCI market about five years ago—and after a strategic review in 2010 decided that it would be better to focus on growing its life and disability insurance.
The coverage had been added primarily for career agents to have a LTC product for their client base, he added, not as an attempt to capture market share, and it amounted to less than 1% of the company’s business as a percentage of premiums, with 8,000-9,000 policies in force.
“I know our policyholders are in good shape,” Dinsmore said. “We’re a highly rated company and we’re very stable. ... We’ve announced no plans for any rate increases, as other companies have. We’re very committed to having good service and honoring all claims.”
John Ryan, of Ryan Insurance Strategy Consultants in Greenwood Village, Colo., said “there’s not much to tell” about Guardian’s exit from the LTC business, since it was such a small part of the company’s business. However, Ryan added that the LTC business itself might “whittle down to 10 companies that write 99% of the business, maybe five companies.” Exiting the business was “probably a great move” for Guardian, he added; “if Guardian Berkshire feels like they need to do this, they don’t make mistakes. It’s a solid company for a reason.”
Ryan added the government’s involvement through the CLASS Act probably is “spooking companies. How much money do they want to pour into this to get overrun by some kind of government program?” he asks. “Companies are choosing what they do best and what they’re most sure of going forward.”