The LTC Industrys Mission: Eliminate Financial Devastation

When watching the sun setting over the water in the Florida Keys, my view of our world seems as perfect as it can be. But it takes only a click of the remote to jolt me back to the reality of the dayreports of the latest tsunami disaster, grim statistics from Iraq, snow storms pummeling the West and floods in the Midwest.

News of young and close friends and relatives suffering from debilitating diseases is even more overwhelming. These all are reminders that we just dont control a lot of the world in which we live.

In the long term care insurance sector, accepting that reality drives some of us to state emphatically that we still have the right, opportunity and obligation to control the issues that nature has left untouched.

In our lifetime, we may or may not see devastating diseases such as cancer, diabetes, heart disease, stroke, Alzheimers and AIDS, brought under control. But over the next few decades, the insurance industry needs to eliminate at least the financial devastation that takes place when these events occur.

When friends, relatives (or yes, even ourselves) have to bear the emotional pain and suffering of these conditions, the least the industry can do is to work together to cure the money part of this “individual tsunami.”

So, where is the industry at this point? Currently, news is circulating that the 2004 industry sales for LTC insurance were down over 25% from 2003. In addition, in some cases, senior vice presidents of actuarial, marketing and sales are battling to stay the course in the businessthey must battle this way because of bad press and lower-than-expected profits and/or concerns about future liabilities.

The last 2 decades in the LTC industry have shown that the business has a stellar group of very smart, very committed and, at times, very overworked folks in its manufacturing side, and at the same time, an eclectic group of accomplished LTC insurance specialty agents, general agents and marketing general agents, who also are looking and acting overworked and underwhelmed with their last years results.

Most importantly, the industry has roughly about 10% of America listening to its advice. This last may be viewed by some as even more bad news; however, its actually great news. It means that 90% of America (and numbers are much higher in the rest of the world) needs the industry and its products more than ever.

Believe it or not, the solution to how to reach this 90% is not as complicated as it may have seemed in the past. It starts by paying much closer attention to two different stakeholder groups. Specifically, they should 1) determine what most concerns the corporate leadership of the LTC carriers; and 2) truly dig down and listen to what the non-buying consumer is saying to the industry.

Finding a way to satisfy both of these groups is the key to success. This is within reach now and in the future.

For years, the real estate industry has said the 3 most important items are: location, location, location. Consumers seem to be telling the LTCI industry something similar: They are saying, very clearly, “simplify, simplify, simplify” the overly complicated LTC product.

Consumers also are telling the industry to make the coverage less expensive. (In a way, the industry leadership is pushing for lower costs, too, by begging advisors to sell LTC insurance to younger, healthier prospects and to sell less “high risk” product design.)

To accomplish this collective goal, the industry needs to alter its message to attract the non-buyers and expand the base dramatically. Along with this, it needs to stop fighting over the 10% of the population that is already buying LTC insurance.

Additionally, the industry needs to alter the design of its programs. It cannot depend on “outside” factors, such as tax incentives, to make market expansion happen. A tax incentive will only work if more consumers believe the coverage is a product they need or want and can afford.

There is more to this story, but for now, start thinking “less is more” and simplifying the customer approach, plan design and cost.

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 Peter@gelbwaks.com.


Reproduced from National Underwriter Edition, January 20, 2005. Copyright 2005 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.