Some Advice For LTC Producers In 2002: Its Time To Upgrade
Much has happened in the long term care insurance environment in the past year.
A number of carriers have decided to withdraw from the marketplace, while others have entered it. Some newcomers have entered with their own product, while others have “partnered up” with existing providers in order to get a feel for the line before making a big commitment.
Of the departing carriers, most left because they were not garnering adequate market share to justify the risk or because their LTC premium volume wasnt sufficient to put LTC insurance on the corporate radar screen and impress the company leadership.
The consensus? In order to be worth a carriers while to hang in the market, LTC insurance has to be a core, not a value added, product line.
I totally agree. This is not a product line in which producers or carriers should dabble. Companies and producers need to specialize in it or, at the very least, give it front burner consideration. Its still very early on in the markets evolution and specialists are very much in need.
Another downside the industry has experienced this past year is that two LTC carriers have run into various problems. Rate increases caused a class action lawsuit in one case, and the cessation of business altogether in the other. Neither situation is good for the industry. Both have the potential of putting a “black mark” on the entire business.
My conclusion from this brief review is that it is time for producers to “upgrade” their approach to the business. Here are some suggestions on how.
Producers must do the best job possible, including performing “due diligence” in the selection of the right plan and carrier for the client.
Which is the best company? I say, it is the one that will be in business at the point of claim. A lot of LTC insurance buyers are now in their 40s and 50s; they need to know that the company they are insuring with has a 50-year or better life expectancy!
What is the best product? I submit it is the one that will still be in force at the time of claim (i.e., contracts that have not sustained numerous rate increases that would cause a policyholder to lapse the plan).
In addition, in todays market, the “flight to safety” plan is definitely on among consumers. It is time for producers to get on board. In other words, start paying more attention to who is making the LTC insurance offer and to the guarantees the company is making to you and your client. My own approach on this is: Dont do business with companies having fewer assets than my client or I have.
Since September 11, we all feel more vulnerable to risk, and rightfully so. Therefore, taking a conservative position on carrier and contract selection is the least producers can do to make clients feel more confident.
People are still buying LTC insurance for two main reasons–protection of assets and maintenance of independence. Make sure their assets and independence are protected with a quality carrier and sensible product choice.
That being said, I believe this year–the year 2002will be a time to celebrate in the LTC insurance industry.
Admittedly, for the last 10 years, Ive been telling producers something similar–that this is the breakout year for LTC insurance, the right year to specialize in our business.
But this year I really mean it! The federal governments LTC plan, to be rolled out later this year, will dramatically raise the bar of awareness on this vitally important topic. In addition, discussions of bipartisan legislation supporting an above-the-line deduction for LTC premiums will also help push the issue.
Now it is up to producers to make the commitment to educate themselves and their clients about the coverage, to stay informed, and to be a true believer in the product (indeed, to become an owner of the concept and the contract).
Then, at this time next year, the industry can celebrate its collective success in doing good deeds for consumers and in being rewarded for same.
Peter S. Gelbwaks, CLTC, is president of Gelbwaks Insurance Services, Inc., Plantation, Fla., and past president of the National Long Term Care Network, an organization of LTC brokerage agencies. His e-mail is email@example.com.
Reproduced from National Underwriter Life & Health/Financial Services Edition, January 21, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.