LTCi: The state of the industry

Now the only remaining carriers in this true multilife/worksite market are LifeSecure and Transamerica.

Although 2013 saw the release of gender rates on individual products, rates for multilife/worksite will remain unisex based on the findings in the 1983 Norris* case, (a retirement annuity group case).

The past year saw top carriers radically tighten up their individual underwriting guidelines. Applicants may face requirements for some or all of the following:

• Blood and urine tests (a result of the new gender pricing products);
• Face-to-face exams (for younger clients);
• Medical record (for clients of all ages);
• Tighter underwriting on conditions like diabetes; and
• Expanded family history profiles.

Although “more than 8 million people (mostly women and mostly older than 65) used the services of a long-term care provider last year,” 2013 saw fewer preparing for the exorbitant risk cost of LTC.

LIMRA reports show that 2013 individual sales premium has decreased 27 percent. This breaks the trend of three consecutive years of positive growth in LTCi premiums.

Why?

Here are a few of the more significant reasons:

• Continued rate increases on in-force business;
• Continued rate increases on new business plans;
• While no top LTCi carriers exited the marketplace in 2013 – both producer and consumer trust is still low because of the recent number of carriers who have exited the market;
• The continued rise of combination LTCi products (primarily Life/LTC and Annuity/LTC);
• The emergence of life settlement plans as a relevant solution for LTC risk; and
• The press continues to be more critical of the LTCi industry than any other insurance industry; hence, there were more negative articles about LTCi in 2013.

Now while reading the above one may think the outlook for 2014 looks grim – this is not the case and I see excellent opportunities for carriers and agents in 2014.

Here are some of the more positive things that occurred in 2013:

1. The industry saw resurgence in the California market with the re-entrance of CalPERS and Genworth;
2. Thrivent, a recent re-entrant, grew more than 4X in sales premium;
3. The industry continues to focus on technology and innovative, evident by John Hancock’s new Web-based LTCi Sales System, “LTC Captivate;”
4. The two major industry conferences were very successful with a large number of agent attendance, (which included newer LTCi agents);
5. Carriers continue to provide great resources to agents and consumers, (e.g., cost of care studies, caregiver studies, etc,);
6. Recently, the top carrier publically re-evaluated its LTCi business and will unequivocally continue to offer LTCi products.

I am looking forward to seeing what 2014 has in store for us.

See also:

• 3 new ways to pitch LTCI
• LTC Specialists Offer Sales Tips
• You’re invited: “3-in-4 Need More” kick-off event