The long-term care (LTC) insurance industry continues to evolve.
More companies have announced changes to their product lines, others have left the marketplace, and, in some cases, companies have returned to the marketplace. In addition, most companies have increased the rates quoted for new business and quite a number of companies have raised premiums on older blocks of policies.
Insurers that were big in the group LTC market have also suspended new sales, asked for premium increases, and ended contracts with employers when up for renewal. Even multi-life sales have been suspended by a number of companies.
The reasons most often stated by insurers for these changes are simple: Most companies experienced more claims than they had anticipated when they first priced their products. Increased claims as well as the prolonged low interest rate environment make it tougher for insurers to pay out claims and run a profitable business.
For those insurers that have elected to stay in the marketplace, the changes have included the following:
- Ending lifetime benefit riders and 10-year benefit periods.
- Ending limited-pay premium options.
- Discontinuing shared care riders.
- Changing the definitions of home care coverage.
- Discontinuing indemnity-style plans.
- Introducing new less comprehensive and less expensive inflation options.
And the list goes on.
Before you panic and get out of the LTC business altogether, it’s good to have a refresher on what’s really been going on and how you can better serve your prospective and even existing clients.
Longtime insurance agents might recall a similar situation played out in the disability insurance (DI) industry in the early 1990s. Many insurance companies got into the product and for a variety of reasons pulled out of the marketplace. Those reasons included more claims than anticipated and an inability to raise premiums, as many disability policies that were bought back then were “non-cancelable.” Definition of non-cancelable: Premiums could not be increased until, typically, age 65.