The short-term problem with selling disability insurance is that we live in an age with an extremely short time horizon.
Executives at publicly traded insurers are obsessed with investors’ obsession with quarterly financial statements.
The world financial regulators and the rating agency analysts are horrified by the idea of “long-tail” obligations and long-range forecasts based on assumptions about the possibility that, for example, insurance company portfolios might earn some yield over a 20-year or 30-year period.
In Washington, policymakers seem to operate according to a chronological system based on the amount of time it takes for an aide to Harry Reid to answer a text message from an aide to John Boehner.
But issuers of long-term disability (LTD) insurance and long-term care insurance (LTCI) have a secret weapon: The possibility that science and technology could soon advance in amazing ways and get huge blocks of claims off their backs.
Alzheimer’s disease, for example, seems to be one of those perennial terrors that will never go away — but there are an awful lot of research papers that make it sound as if there could be many ways to prevent or cure it within a decade or so.
Meanwhile: The Smithsonian Channel is airing a documentary about a project to create what amounts to a very crude a “bionic man.” The body — which cost only about $1 million, not $6 million — has a long list of artificial parts.
Of course, the true cost of the bionic body would be much higher if it had been created to be an approved medical device, rather than a fun tech project, but it seems as if improvements in technology could soon make later versions of the body better and cheaper.
What if, 10 or 20 years from now, insurers could ward off many disability claims by simply requiring insureds to make reasonable attempts to get and use bionic body parts before filing claims based on body part dysfunction?
The acute care health insurers (and any future sellers of supplemental prosthesis insurance) may not be happy, but the disability insurers could benefit from the best possible strategy for reducing claims incidence: Keeping income-reducing disability from occurring in the first place.