New data from LIMRA International suggests long term care insurance sales may finally be recovering modestly after several years of slumping sales.
A close look at the figures shows, however, that many companies still have not recovered from a slump in sales that most agree was triggered by rising premiums, the departure of several carriers from the market and other factors undermining consumer confidence in the products.
Yet some companies report significant growth, while others have high hopes that a sales turnaround is imminent.
The data from LIMRA, Windsor, Conn., found that new LTC business in terms of annualized premium rose 3% in 2007, compared to an 8% decline in 2006.
However, the picture was mixed, with 1% fewer new buyers in 2007 than the year before. Of the 29 companies contributing to the survey, only 15 actually reported increased sales. The remaining 14 reported declines.
Interviews with executives of John Hancock Life Insurance Company show its long term business was a notable exception to lackluster sales.
Hancock, Boston, led the industry in 2007, selling more than 100,000 policies totaling $197 million in premium, across its retail and group LTC insurance businesses.
Joe Catalano, senior vice president, John Hancock Long Term Care, says his company’s retail sales grew 28% last year, the second year in row it recorded double-digit growth in the retail market. He attributes a good deal of the success to Hancock’s effort to field strong products in every market segment, including small multi-life groups.
Its Leading Edge line has become Hancock’s best selling LTC product, with 25% of its LTC business, he points out. Among its features are options designed to appeal to different pocketbooks, including varying face amounts and an inflation feature tied to the Consumer Price Index. Premiums can be 20% to 25% lower than traditional LTC products, Catalano notes.
On its group side, Hancock boasted new premium growth of 31%, compared to an industry average of 8% reported by LIMRA.
Dennis Healy, vice president of group long term care insurance for Hancock, reports the company added 87 new clients to its group roster, including 8 “jumbo” groups, defined as having 15,000 or more employees.
“Last year, a significant number of employer groups came to market, and that drove a lot of new sales growth for us,” says Healy.
Takeover opportunities changed as well in a business that previously had seen little movement of group business between carriers, Healy notes. “We recently started to see a number of employers go out to bid.”
Genworth Inc. also reported strong growth last year, partly a result of the introduction of new lower-priced policies as well as its takeover of the LTC business of the AARP, Washington.
MedAmerica Inc. reported lower sales last year, but its top executive predicts it is on the cusp of important growth due to a drastic shift in its product offerings.