Attendees here at the 7th Annual Intercompany LTCI Conference sponsored by the Society of Actuaries were taken aback by last Monday’s New York Times article claiming thousands of long term care policyholders had seen their legitimate claims denied. Many attendees thought the article exaggerated the problem, yet some thought it was probably not far off target.
The article, which appeared on March 26, the first day of the conference, was widely discussed by attendees. Among other incidents, it reported on an 81-year-old widow who was still trying to get her claim for benefits approved by Conseco Inc. 4 years after she went into a nursing home for diabetes and hypertension, ultimately complicated by dementia. It also cited Penn Treaty and Bankers Life as companies that allegedly had a high number of complaints.
“Some long term care insurers have developed practices that make it difficult if not impossible for policyholders to get paid,” the article stated.
Christopher Perna, president of MedAmerica Insurance Company, Rochester, N.Y., said of the article that he was “very disappointed that’s what the public is hearing about our industry.”
Perna pointed to studies by the Robert Woods Johnson Foundation showing LTC policyholders were very satisfied with the product and with the delivery of benefits. Caregivers, too, said the fact their loved ones had policies alleviated their own stress.
“We’re not getting credit for the value of the product,” Perna said. “We’re passionate about what we do and are discouraged when the press publishes instances where things did not go well. The reality is that people are well served by our product.”
Walter Jones Jr., assistant vice president, Raymond James, Tampa, Fla., thinks if there are excessive denial of claims, it could be a sign state regulators aren’t doing their jobs. Beyond that, producers also have to check the financial integrity of the carriers they represent, Jones counsels. “You need to be very careful about the quality of the companies you deal with.”
Adverse publicity always causes some people to be far more cautious about buying LTC insurance, and that is not good, Jones says. “It would be more beneficial to the general public if the New York Times put it in the context of the overall industry.”
Producers, too, can exert pressure to be sure claims are handled in good faith, he argues. “We should all make a point of dealing with companies with strong reputations,” he says. “Do they pay claims? Do they treat customers well? Is customer complaint resolution a forte of theirs?”
Cameron Truesdell, chief executive of LTC Financial Partners, Kirkland, Wash., says he has had few claims denied.
“I’m not saying some companies don’t have issues,” he says, “but companies like Genworth, MetLife, Hancock and Travelers aren’t the problem. They bend over backwards to pay claims.”
Moreover, he argues, LTC loss ratios are mandated by state regulations.
He calls the Times article and the reaction to it a “one week’s annoyance.” He points to an American Association for Long Term Care Insurance estimate that the industry is averaging payouts of $8 billion a year as a sign that carriers in general are treating customer claims fairly.
Christine Crowley, a partner in Truesdell’s firm based in Colorado, observes that “in every industry, there’s a bad egg.” But she thinks Penn Treaty, one of the carriers cited in the Times article for high claims denial, is getting a bad rap.
“Penn Treaty got into financial trouble because they pay so many claims,” she says.
Phyllis Shelton, president of LTC Consultants, Nashville, Tenn., argues that, despite the occasional problem, she has found carriers’ claims-filing processes to be smooth and problem-free.
“Producers shouldn’t have to bulldog claims,” she says. Shelton believes carriers should notify the agent when a client files a claim but that the agent should not have to get involved any further.
“With most carriers, it’s not like the way it was reported in the Times,” she says. “Normally, I barely have to get involved. Those situations are really atypical.”
John Greene, vice president of congressional affairs for the National Association of Health Underwriters, says the proof that LTC insurance is an excellent product lies in the fact that people who have policies tend to keep them.
“You don’t see the lapse rates you used to because it is a different product, a good product despite rate increases,” he argues.
Jesse Slome, executive director of the AALTCI, Westlake Village, Calif., thinks the Times article poses a potential concern for the industry.
“The fact is, we have a positive message to tell the public. It’s time for the industry to speak out with one voice to acknowledge the issues [with claim denials] that may exist. If we bury our heads in the sand, we will be doing the exact same thing we blame consumers for doing when it comes to long term care planning.”
Phillip W. Sullivan, president, SellingLTC.com LLC, argues carriers have a moral obligation to pay on legitimate claims. “If a carrier is going to accept money for a policy, then it should in good faith deliver the product they promised.”
He also lays responsibility for paying claims ultimately with the CEO of each carrier. “If the CEO knows [unfair practices] are going on, he should stop it. If he doesn’t know, then he’s not doing his job.”
Sullivan insists, however, only a small number of companies are the cause of most complaints. “The industry as a whole is meeting its obligations to policyholders.”