The long-awaited burst of long term care insurance sales to individuals has yet to materialize.
Observers broach a myriad of reasons for this. These include failure to pass a meaningful federal tax deduction, industry instability in the past few years, rate concerns, media people who dont get it, and no implementation of a “Got LTC Insurance” consumer awareness campaign.
I believe that many people are waiting for the wrong cure for the sales ailment. It seems the industry is at a significant crossroads, and it must make some key decisions before sales will pick up. That is the subject here.
The good news is, consumer awareness of the LTC issue has never been higher. For example, more American families are receiving LTC insurance benefits than ever before. In 2002, annual paid claims exceeded an estimated $1 billion for the first time, according to my research.
In addition, at the federal and statewide levels, more political leaders are speaking about LTC and advocating self-reliance. Also, with one notable exception, newspapers and magazines seem to be taking an increasingly positive approach to LTC insurance.
Finally, there are now some 10,000 dedicated LTC insurance professionals blanketing the nation. They are holding community seminars, running LTC insurance ads and prospecting for clients more effectively than ever.
But with all of this, producers are telling me that their individual LTC insurance sales generally are flat or even down from a year ago.
Producer and insurer enthusiasm and support for individual LTC insurance as a meaningful and viable profit line seem to be waning. The potential risk this implies should not be overlooked. If frustrated producers seek other avenues of income, sales will continue to slide. Insurers will then validate their concerns that the product cannot be sold. And, it certainly cannot be profitable.
It is worth noting that the malaise that seems to be dampening enthusiasm for the product has not spread to carriers in the group LTC insurance market. They are indeed moving forward with aggressive and focused efforts to capitalize on the enormous need for LTC insurance.
But, again, what about individual LTC insurance? Will sales achieve the hoped-for momentum in the year(s) ahead? In my opinion, not until several significant changes occur. These changes include:
The rather insular individual LTC insurance industry needs to transform itself from looking within to truly looking outward.
Specifically, it needs to adopt the marketing perspective of professionals outside the industry. This will give industry leaders a current, unbiased understanding of real consumer dynamics in the marketplace. The heretofore acceptable practice of adding new bells and whistles to policies, to enhance older designs, is not the short-or long-term solution. Just as toothpaste manufacturers must reinvent their product category every few years, individual LTC insurers need to develop New & Improved policies to reinvigorate producer enthusiasm and consumer interest.
Product designers that seek market penetration greater than 5% to 7% need to build a product with broader market appealone that “the dogs will eat.”
Cost is certainly a factor, and most experts appear to agree that current producer sales preferences do not coincide with achieving greater market penetration. So, first step: Do an industrywide examination of current claims experience to determine which benefits really are being used, what levels of care really are needed and what new visions for policy design will achieve a balance of viable protection and insurer profitability.
The industrys brain trust must band together to make a meaningful commitment to train (and retrain) producers.
This training should focus on current information, not material derived from the time when LTC and nursing home protection were synonymous. Facts and figures that are often more than 10 years old have little relationship to the current realities that many consumers now experience.
The LTC insurers that remain committed to the individual marketplace must take an active and aggressive role in marketing the benefit of individual LTC protection that goes beyond direct mail campaigns.
Such campaigns seem designed mostly to generate agent leads.
The industry needs to recognize that compensation is only part of the equation.
Right now, too many players seem to be saying, “Here, were giving you money. Now, you figure out how to sell this stuff.” That approach is not destined for successbecause it does not address the greater needs of agents struggling to find more prospects.
In sum, producers of individual LTC insurance feel increasingly disenfranchised. The early individual LTC insurance pioneers displayed spirit and enthusiasmand intense fervor. This became the foundation for mighty field forces that were inspired to help the public obtain much-needed LTC protection. This spirit can be, and needs to be, rekindled. When that happens, individual LTC insurance sales will soar.
Jesse R. Slome, of Westlake Village, Calif., is president of Sales Creators Inc., director of the National LTCi Producers Summit conference, and co-founder of the American Association for Long-Term Care Insurance.His e-mail is email@example.com.
Reproduced from National Underwriter Life & Health/Financial Services Edition, January 30, 2004. Copyright 2004 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.