Long term care insurance is a purchase many consumers think they can postpone until economic conditions improve. As a result, LTC insurance sales ran into some difficulty in 2008.
Sales of the product were down only 1% from year-earlier levels as of the third quarter, according to LIMRA International, Windsor, Conn.
However, results for the third quarter alone were down from the same period a year earlier by 9% in terms of covered lives and down by 7% in premiums collected. It remains to be seen whether the flurry of corporate layoffs, bankruptcies and assorted bailouts widely reported near year-end suppress sales even further.
Karen Fisherkeller, an associate analyst with LIMRA International, Windsor, Conn., notes the quarter reflected the first decrease in LTC premiums since 2006.
“The economy is the explanation,” she says.
The group side of the LTC market showed one area of growth. In the first three quarters of the year, group premiums were up 2% and participation was up 3% for all group business, including not only employers but also associations and other affiliations, reports Fisherkeller.
Compounding the marketing challenges for LTC insurance in 2008 were notices of premium increases for older policies by 2 major carriers.
John Hancock Financial Services, Boston, asked state regulators for rate increases averaging 13% and 18% on policies Hancock had taken over from Fortis Inc. in 2000. Genworth Financial Inc., Richmond, Va., filed for increases ranging from 8% to 12%.
An awkward development for the industry was a report from the Government Accountability Office that found wide fluctuations in rate increases granted for LTC insurance among different states. Roughly half of the states have adopted some form of rate stability measures, but the report argued that this leaves the rest of the country unprotected.
Whether this report could lead to moves to establish more uniform LTC rate-setting procedures among states remains to be seen.