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Consumers to LTCI Carriers: Will You Be Here Tomorrow?

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One obstacle to selling more long-term care insurance (LTCI) may be consumer uncertainty about whether the insurers are in the LTCI market to stay.

Jeffrey Brown, a finance professor at the University of Illinois, and two colleagues have reported that finding in an LTCI paper published in Health Affairs, a health finance and health care delivery academic journal.

The researchers used a survey of about 3,000 U.S. households whose members are interviewed regularly over the Internet.

The researchers looked at many factors that might affect demand for private LTCI coverage.

Other researchers have found that consumers show a strong interest in the idea of owning private LTCI.

But Brown and colleagues found that many forces reduce the likelihood that consumers will actually end up owning private LTCI. The researchers found, for example, that many consumers believe they can use savings or informal support from relatives to handle their long-term care (LTC) needs.

The researchers also looked at how much consumers trust LTCI vendors.

“If people have concerns about counter-party risk—that is, the risk of insurers’ going bankrupt and leaving policy owners without recourse—demand for coverage would be reduced,” the researchers say. “Consumers might also interpret the recent exit of several major insurers from this market as cause for concern.”

Some LTCI carriers have been supporting visible LTCI promotional campaigns, but some carriers have been dropping LTCI programs.  

The researchers asked consumers to rate how much they agreed with the following statement: “I am concerned that an insurance company may not remain in business long enough to pay for my care.”

About 46% of the participants said they agreed or strongly agreed with that statement. Only 19% said they disagreed or strongly disagreed.

Only about 17% of the consumers who were concerned about insurers staying in the LTCI business had private LTCI coverage; about 34% of the consumers who had confidence in carriers staying in the LTCI market did have private LTCI coverage.

To encourage more consumers to buy private LTCI, policymakers and insurers will probably have to deal with many of the factors slowing LTCI sales, not just one factor in isolation, the researchers conclude.


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