Private long-term care insurers have been stumbling for years through the rubble left by bad underwriting assumptions and low interest rates.
When Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI), moderated an insurance company executive panel discussion at a recent long-term care insurance (LTCI) producers conference, he asked about reasons for optimism.
The producers wanted to know why some of the insurers have been limiting LTCI sales.
See also: LTCI in the Doghouse.
One of the panelists, Tim Kneeland, president of Transamerica Long Term Care, started by acknowledging that the past few years have been challenging.
“It wasn’t fun on our side, and I know it wasn’t fun on your side,” Kneeland said.
But the CEOs also talked about about ways they think insurers can help get LTCI moving again.
Here are seven of their ideas, drawn from AALTCI's recording of the discussion.
1. Have hope.
Kneeland said holding on to optimism is essential for anyone in insurance sales.
“You better wake up in the morning optimistic, because, every day, there are going to be plenty of things during the day that are going to challenge you.”
Kneeland said he gets a sense of optimism from watching agents and general agents developing new sales ideas and market-broadening strategies
Scott McKay, a senior vice president at Genworth Financial, said he’s starting to see an awakening inside the insurance industry about the importance of long-term care (LTC) planning.
“People are realizing that long-term care insurance now may be more important for much of the population than life insurance,” McKay said.
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2. Keep talking to reporters, analysts and government officials.
LTCI has spent time in the media woodshed. Some nonprofit groups that have tried to address dementia care and LTC planning needs have dismissed private LTCI as a niche solution.
But Steve Sperka, president of Northwestern Long Term Care Insurance Company, said he turned on the radio on his way to the LTCI conference and heard two radio reports about longevity risk.
Michael Hamilton, a vice president at Lincoln Financial Group, said he thinks people in the media and elsewhere are starting to notice that insurers offer much-needed solutions.
“We have got a relevance that hasn’t been there before,” Hamilton said.
Michael Doughty, general manager of John Hancock Life Insurance, said he sees more openness to dialog in Washington.
“There’s a real recognition there that things have to change,” Doughty said.
See also: Federal program boosts some states' LTCI use.
3. Court a wider range of consumers.
Insurers once focused on selling expensive stand-alone LTCI policies that could meet just about all of a typical consumer’s LTCI needs, and life-LTC and annuity-LTC hybrids designed for consumers who could pump in hundreds of thousands of dollars in cash all at once.
Since 2012, Lincoln has increased the percentage of hybrid sales it is making to “multi pay” customers – as opposed to single-premium customers – from 5 percent to about 30 percent, Hamilton said.
Kneeland said his company is talking to consumers and producers about a more affordable stand-alone policy.
“I’m excited about the fact that we’re trying to work with you to broaden the market,” Kneeland said.
See also: New products, new eyes.
4. Talk to state insurance regulators.
In the past, many state insurance regulators had set views about how LTCI should work.
Going forward, “I think regulators are going to be much more open to accepting innovation,” Doughty said.
5. Locate the reinsurers.
In the past, reinsurers flocked to the private LTCI market.
Then, the hard times rolled in.
McKay said Genworth views reminding reinsurers about LTCI as part of industry stewardship.
“We need to keep encouraging the reinsurance market to come back to long-term care,” McKay said.
Genworth has been telling 20 reinsurers about how the LTCI industry works today and urging them to "get their toes back in the water,” McKay said.
See also: CNO makes LTCI reinsurance deal.
6. Hire agents.
Today, McKay said, “there are 10 life insurance agents for every long-term care insurance agent.”
One of the keys to expanding LTCI sales is expanding the number of people selling LTCI, McKay said.
See also: The new LTC basics.
7. Remember the need.
“The issue is not going to go away,” Sperka said. “It’s only going to grow.”
“That need is so real,” Doughty agreed. “It’s just getting bigger and bigger. We believe somebody’s going to figure it out, and we’d like it to be us.”
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