Premium flexibility has helped the U.S. long-term disability (LTD) insurance market weather low interest rates better than the private long-term care insurance (LTCI) market.
Carmi Margalit, a rating analyst at Standard & Poor’s Ratings Services, gave that assessment Tuesday at an S&P press briefing.
S&P has been publishing 2014 market forecasts.
In the U.S. life outlook report, analysts note that low interest rates have prompted life insurers to suspend sales of LTCI and some other products that depend heavily on interest-linked earnings.
“The potential benefits of a sharp rise in interest rates include the opportunity for higher new money rates, particularly for long-tailed in-force lines, such as long-term care and long-term disability insurance,” the analysts write.
But, for now, the level of competition is much stronger in the LTD market than in the LTCI market.
Like LTCI issuers, LTD issuers have increased prices to compensate for lower investment yields, but the number of significant LTD players is about the same as it was a few years ago, Margalit said.