As LTC e-Wire, National Underwriter Life & Health’s monthly e-newsletter, began its fifth year, we asked long term care insurance producers what changes they have seen in the business over the past four years.

In general, they agree, the business has mutated sharply from a time of much lower prices, fairly easy sales and a wide choice of carriers.

What follows are some of the biggest differences veteran producers cite about the business now vs. four years ago:

o Most of the low-hanging fruit has been picked. “The early adopters of the product already have bought,” says Barry J. Fisher, president, Barry J. Fisher Insurance Marketing Inc., Woodland Hills, Calif. “Now we have to train agents to sell profitably in a new market.”

“The easy pickings are done. Those were the seniors who were planners,” says Margie Barrie, national marketing coordinator, Hagelman Barrie Sales Training Solutions, University Park, Fla. Now producers have to look deeper.

o Sales are tougher to make. Thomas Riekse Sr., chairman of LTCI Partners LLC, Libertyville, Ill., says sales are harder because carriers have raised prices. “We saw the markets rationalize themselves, with carriers devoted to appropriate underwriting guidelines and pricing still in the market, while those that weren’t are no longer in.”

“It’s certainly harder for anyone to make a living selling long term care insurance, because product prices are much higher,” adds Claude Thau, president, Thau Inc., Overland Park, Kan. “Partly, that has to do with persistency [buyers holding on to their policies for long periods]. It turned out to be much greater than carriers originally expected,” he says.

“Insurers took a closer look at their book of business, and some features such as compound inflation protection weren’t covered well,” adds Barrie. She thinks closer scrutiny by state regulators also helped push up prices.

“Rate stability became important to the National Association of Insurance Commissioners, so pressure from the regulators caused an increase in prices,” Barrie says.

o Carrier competition has decreased. “There are more companies getting out than in,” is how Phillips Ruben, a producer with Vision Financial Planning Inc., Boston, puts it. Price and profit pressure pushed a number of LTC carriers out of the market, which has created a hard market.

“Consolidation was due; it had to happen. There were too many carriers,” explains Barrie.

“It’s become difficult to shop price because prices are not that much different anymore,” adds Ray Dobbie, president, Dobbie Insurance Agency Inc., Wellesley, Mass.

o The market is getting younger. “During the last four years, as the average price of policies has gone up, the average age has gone down,” says Riekse. “Looking at our block of business, the average age dropped to 58 from 60.”

“It’s clear the market has shifted to boomers,” says Fisher. “I haven’t seen a new product for seniors for a long time. People in their 50s are buying.”

o Group sales are increasing. One reason the LTC insurance business will get better is an increased interest in the product by businesses, experts believe.

“We’re starting to see more multi-life sales than four years ago and expect to see more,” says Riekse. “The market has indicated it has to go to younger folks. For their part, they want a place where it’s convenient to buy and where they feel safe about buying. Where’s that? The worksite. Benefits people, though they’re struggling with health insurance, have to see about their employees’ security and retirement.”

“There’s certainly a greater interest in employer market sales, both as an executive carve-out and in a general voluntary plan,” says Nancy Simm, director of long term care, Highland Capital Brokerage, Avon, Conn. “We’ve seen both.”

o Product innovation is on the rise. “Policies are offering more flexibility and are increasingly more expensive,” observes Ruben.

Riekse says the recent growth of cash plans, as opposed to reimbursement to providers, will spur growth. “It’s more a disability type of approach. I expect to see more combination plans, too, such as those combining reimbursement with cash.”

But more change is needed, some say.

“Products have to be simplified,” insists Barrie. “They are still too complicated for agents to sell, particularly for the casual long term care insurance seller who sold other products primarily, and they’re complicated for consumers to buy.”

As for the immediate future, these veterans are basically glass-half-full people. Most predict a return to strong growth.

Some are looking for a sales boost from proposed legislation now in Congress.

“The kick I’d like to see is one of these bills passed, such as tax deductibility [for LTC premiums],” says Simm. “Changes in Medicaid eligibility would also help, because if the rules were tighter, it would force more people to buy long term care insurance.”

Riekse does not have high hopes for passage of legislation that would help sales. But he does see other grounds for hope.

“There will be new sales approaches,” he says. “Salespeople will be using a lot less statistics to sell and will start using a rational approach: ‘This is what you need to protect your assets.’”

This article originally appeared in the November 2005 issue of LTC e-Report, an online publication of National Underwriter Life & Health. You can subscribe for free to this monthly e-newsletter by going to www.lifeandhealthinsurancenews.com.

Last 4 Years

==Most of the low-hanging fruit has been picked.

==Sales are tougher to make.

==Carrier competition has decreased.

==The market is getting younger.

==Group sales are increasing.

==Product innovation is on the rise.