In an often candid panel discussion during the Intercompany Long Term Care Insurance conference here, top executives of 5 major LTC carriers sounded off on an a wide range of issues facing their industry.
Building consumer awareness and demand for LTC insurance were prime concerns, the executives agreed.
More Americans than ever are aware of the cost of long term care, said Buck Stinson, president of the long term care insurance division of Genworth Financial Inc. But more needs to be done, he added.
Laura Moore, senior vice president of John Hancock Financial Services Inc., said the industry’s mission is to show it has the financial commitment to support LTC coverage so that policyholders can be sure they’ll be protected if the time comes.
All the executives had a strong reaction to a recent New York Times article claiming, among other things, that thousands of LTC claims had been denied by carriers.
Among other terms, they called the article “irresponsible,” “disappointing” and “unfortunate.”
David Acselrod, vice president of MetLife Inc.’s long term care and critical illness products, called the article “incredibly one-sided,” while Andrew Mako, senior vice president, Prudential Financial Inc., said it made it obvious “we all have to do additional work” to convince consumers of the worth of LTC insurance.
Moore called the article an affront to the “absolute pride I take in the industry” and the responsible way it meets its responsibility.
“We claw and scratch to make progress and make people understand the need, and if one irresponsible article comes out, our progress seems so fragile,” she lamented.
Stinson said he was “disappointed” because the industry has worked hard to build consumer confidence and awareness.
Bagshaw said the article’s assertion that 25% of claims in California were denied was “so wrong, we have to believe it’s purposeful.”
Among other topics the executives discussed:
Cash payout products. Moore anticipated Hancock would introduce a cash component as an option to existing products, but others on the panel were more cautious.
“We’d have to pay for it somehow,” observed Stinson. “We’re more focused on affordability and less on simplicity.”
“They’re expensive,” agreed Mako. “We’ve been focused more on home care.”
Bagshaw was vehemently opposed to cash products. “Cash at 100% level is wrong and stupid,” he asserted. Such policies would foster bogus claims, ultimately producing “a pretty big sucking sound” as they soaked up industry cash, he predicted. “When someone figures out he could get income for life, he’ll see it as the world’s best pension plan,” he said. “All he has to do is pretend he can’t bathe himself.”
Acselrod disagreed. “There’s a segment where a cash product is a perfect fit and needs to be in the agent’s quiver,” he said.
Market stability. The fact there are much fewer LTC carriers today than 10 years ago has made the market more stable, observed Moore. “Actually, I wish there were more carriers entering the market,” she said. “They would need scale and the wherewithal to survive, but it would be nice if we saw more balance in the industry.”
Stinson, too, believes the industry is much steadier than 5 or 6 years ago. “I used to wonder when the next big company would be exiting the business,” he said. “Now the headline is, ‘What’s the next big product?’”
Mako believes the industry has learned much. “We are better priced and understand our assumptions better. We still may see some fallout at the lower end, but larger companies are much more stable,” he said.
Compensation. Prudential is looking at improving incentives to lure more producers to sell the product, Mako said.