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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.

Over on the group side, the business suffered such a steep decline because 2003 (especially the first half) was an extraordinary period that saw the success of the federal LTCI program. Taking this program out of the results shows that sales in the first 9 months of 2004 were flattish, LIMRA says, with the same kind of diverse experience among carriers as in the individual market.

Rarely, I think, has a product line been the subject of such high hopes and such demonstrated need as long term care insurance, while at the same time producing gobs of disappointment on both scores.

Somehow the message is not getting through. Part of it is the abiding denial and ignorance on the part of the American public over their long term care needs; but another part is the lack of a single, coherent, overarching message from the industry.

In last weeks issue, Mike Pinkans wondered whether blended contracts might be one of the developments that could spark LTC insurance sales. But, he admitted, “its been an uphill battle” for his company.

If I were to bet on what might make sales catch fire at some point down the road, my money would be on products that transform as the owners needs change, i.e., a life or disability policy that transforms into an LTC plan at or around age 65. This would make sense to people, I believe, because their premiums would be covering needs that were most pressing at their current age.

At times like these, its worth remembering the dont last forever, although it may seem like they do. But isnt this also the perfect time to start thinking about charting a new course?

Steve Piontek


Reproduced from National Underwriter Edition, January 27, 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.


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