Yes, some players in the long-term care insurance (LTCI) industry have made decisions to retrench, but those decisions should give them the strength and stability to stay in the market for the long haul.
Debra Newman, a veteran long-term care insurance (LTCI) producer based in Minnesota, gave that assessment of the industry in a recent e-mail.
Newman made similar remarks in a webinar she produced, and recorded, for agents, brokers and anyone else with an interest in the state of the LTCI market.
Some insurers have dropped out of the LTCI market in recent years, and many have increased prices.
In the interview, Newman acknowledged that she has heard some predicting the “death of LTCI.”
“According to LIMRA, sales of long term care insurance are down both in premium and number of lives,” Newman said.
“However, several of the industry leaders have made conscious decisions to slow down sales until they felt comfortable with the pricing of their current products,” Newman said.
Genworth, for example, had been intentionally slowing sales, by reducing producer compensation and pulling out of the California market, Newman said.
“Both of those things have changed now,” Newman said. “With the introduction of their new product, they have reinstated the previous compensation, and they are re-entering California on July 1 with a new product. So they have turned the tide, which should reverse some of what has been going on.”
Another company, Mutual of Omaha did a similar thing, Newman said.
“They reduced compensation, in order to stem the influx of business until they could introduce a new product (which we’ve heard will be available this summer or fall),” Newman said. “John Hancock made similar adjustments before that. That’s three of the top ten carriers who intentionally put on the brakes on sales for a bit.”
What John Hancock did seems to have helped strengthen its LTCI business, Newman said.
She cited Northwestern Mutual, Thrivent, MedAmerica and LifeSecure as examples of carriers that have stayed in the LTCI market and built market share.
Overall, “the supply [of LTCI products] is fine,” Newman said. “Much like what happened in the disability market years ago, we’ve seen the number of carriers shrink to a handful that are truly committed to the market. For many of the remaining players, LTCI is a core part of their focus, not an afterthought.”
The LTCI carriers also slowed efforts to reach out to brokers for awhile, but now that they have come out with their new products, “we are seeing them launching marketing campaigns and agent education programs to get brokers re-engaged with the business,” Newman said.
In some cases, because carriers have come up with creative ways to meet the needs of cost-conscious consumers with more affordable policies, the average premium per insured might fall even as the total number of policies sold rises, Newman said.
John Hancock, for example, found when it did a consumer survey that a small decrease in the price of an LTCI policy might make a big difference in whether a consumer actually buys a policy, Newman said.
“Something as small as the $5 difference between spending $75 a month instead of $80 a month can increase the likelihood that people will buy by 14%,” Newman said. “We need to listen and sell people what they are asking for, not what we think they should buy. We need to re-learn the messaging around LTCI. We should seek to solve a part of the funding about long-term care, not necessarily the whole thing.”
In the long run, Newman said, the main reason to be optimistic about the LTCI industry is that “the need is still there.”
“Now more than ever we’re all hearing about families having this discussion about what they will do,” Newman said. “From the kitchen table to the planning tables in Washington, D.C., people are looking for solutions.
“The biggest problem lies with the advisors not having enough confidence to go out and talk to consumers about this problem. If you’re not comfortable having those difficult conversations, you owe it to your clients to team up with someone who is.
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