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LTCi: The state of the industry

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This is the time of year when many companies are talking about the year that was and the year that will be in their annual reports. Catherine Dove, an LTCi industry veteran, sent us her version of an LTCi industry letter to stakeholders.

The long-term care insurance (LTCi) industry went through more changes in 2013 – highlighted by the introduction of gender rate pricing.

As 2013 unfolded, it was quite obvious that gender rates were clearly not a fad but a trend and paradigm shift in the way the industry will be pricing LTCi products in 2013 and beyond.

LTCi took a page out of the Life insurance industry by using a gender premium rate pricing structure on its products. Until 2013, LTCi plans used unisex pricing, where carriers charged the same premiums regardless of the sex of the individuals. Historical data have consistently shown that women are living longer and industry reports show their claims have been more costly than males. The move to gender rates is designed to better reflect the risks of insuring females.

In addition to living longer, females usually have no caregivers at home, which increases the risk to the insurance carrier. In 2013, four top carriers released products with gender rate pricing.

Other carriers have filed gender premium rate pricing structures, as well.

However, four insurance carriers have been named in a sex discrimination complaint filed by the National Women’s Law Center (NWLC) alleging that the insurers charged women up to 40 percent more for long-term care insurance, which pays for nursing home care.

This nonprofit group argues that new anti-discrimination language in the Affordable Care Act, known as Obamacare, protects female consumers who buy LTCi coverage, as well as those who buy traditional health insurance.

In 2013, the multilife/worksite marketplace was depleted by carriers’ decision to exit this market. Genworth announced its exit back in January and MedAmerica recently discontinued its simplified issued multilife programs.

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.


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.

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