I was going to begin this piece by remarking that the long term care insurance business was in the doldrums last year. But then to make sure I did not mislead, I went to Websters, where doldrums are defined as “equatorial ocean regions noted for dead calms and light fluctuating breezes.”
Considering how precipitously overall sales had declined through the third quarter, I thought that saying the business was in the doldrums might be incorrect. So, how about saying the business has been going through the ?
The , according to the dictionary, are “either of two ocean belts characterized by calms, light winds, high barometric pressure and hot, dry weather” and were given that name “because sailing vessels transporting horses to the West Indies often had to throw horses overboard because of water shortages resulting from delays while becalmed.”
Considering that some major LTC players have, in effect, thrown their horses overboard (i.e., gotten out of the business), this may be a more appropriate description.
Lets just hope that the entire business doesnt veer too close to the Bermuda Triangle, otherwise we may never hear of it again!
Whatever you call it, the LTCI sales situation has been more than a little disheartening.
According to LIMRA International, annualized new premium of individual LTC insurance declined 28% in the third quarter of 2004 compared to the same period the year before. The group market was, if anything, even more distressingannualized new premium was off an astonishing 87% in the third quarter of 2004 compared to the previous year, LIMRA says.
The LTCI business is obviously going through some wrenching times. But it is also going through a transitional period as well. For while those figures are grim on the surface, they mask some countervailing winds just below.
So, according to LIMRA, while 3 carriers exited the business (horse overboard!), another carrier that is still around tripled its new premium. LIMRA also notes that just 7 out of 23 carriers experienced growth during the first 9 months of 2004, and of these only 2 were in the top 5. But these 2, LIMRA adds, more than doubled in sales based on new premiums.