Companies that write disability insurance get together regularly to at least pay lip service to the idea that their product is important, that they ought to price it in a sensible way, and that they ought to figure out ways to promote it better.
Disability insurers have, for example, created a fairly high-profile Disability Insurance Awareness Month campaign.
Long-term care insurers (LTCI) and distributors have tried to do the same with the 3 in 4 Need More Campaign, for example.
Maybe, in the case LTCI market, even insurers that have dropped out of the market ought to team up to figure out how to make the market more attractive.
Some producers chortled with glee when actuaries at the U.S. Department of Health and Human Services (HHS) made HHS give up on the idea that HHS could make the Community Living Assistance Services and Supports (CLASS) program sustainable.
Unfortunately, it seems as if many commercial insurers with individual and voluntary group LTCI programs have come to similar conclusions about private LTCI programs.
Unum Group Corp., Chattanooga, Tenn. (NYSE:UNM), recently shut down its group LTCI program.
Manulife Financial Corp., Toronto (TSX:MFC), has put the John Hancock Long-Term Care unit in a businesses “not targeted for growth” category.
Carriers have been deciding that the interest rates insurers use to build earnings on invested assets are low and seem as if they will stay low for a long, long time; that marketing LTCI is hard; and that the people who do buy LTCI coverage cling to policies with an iron grip that throws off actuarial projections.
Stephen Moses of the Center for Long-Term Care Reform Inc., Seattle, has argued passionately, and persuasively, that Medicaid programs have undermined private LTCI programs, by creating what will no doubt soon prove to be the brutally incorrect illusion that Medicaid will provide a decent level of nursing home care for just about everyone outside the Top 1% who knows how to hire a Medicaid planning advisor.
But the actual LTCI program performance has not been all that horribly wretched, at least when reported in terms of Generally Accepted Accounting Principles (GAAP).
At Manulife, for example, sales dropped to $15 million in U.S. dollars, from $42 million.
Sales dropped partly because Hancock has asked state insurance regulators for premium rate increases averaging about 40% on the majority of its in-force retail and group business and has received approvals for increases in 29 states, the company says.