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LTCI Watch: Service

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Low interest rates, uncertainty about prices, and general pessimism make this a difficult time to sell any financial product, and especially a product that’s supposed to pay long claims that may start decades from now.

See also: LTCI Watch: Double whammy

Who’s truly eager to promise to pay premiums for long-term care insurance (LTCI) for decades when it seems somewhat optimistic to assume that the United States will be around for decades?

See also: LTCI Watch: Macro risks

But the United States has survived almost 238 years. Many of the big insurers in the LTCI market have lasted more than 100 years. It seems as if the logical approach is for people in the LTCI market and other forward-looking markets to proceed as if the economy will be around for a while.

One part of that is providing a minimum level of customer service — for the products that failed as well as for the products that did well. Con artists sell people glowing promises, then disappear. Insurance companies are supposed to answer their phones.

Some observers of the LTCI market are afraid of what the current difficulties in the market will mean for servicing of in-force claims. Of course, this is a big, hard world. Consumers who have LTCI coverage through a miserably failed block of LTCI policies can’t expect to be able to log into a personal LTCI web portal and have an attractive avatar talk to them about the local weather before telling them about their local home care options.

But, at the same time, the issuers should get back to callers (and correspondents) at some point, with people who at least have some theoretical ability to understand the questions and come up with accurate answers. Issuers also should pay valid claims at some point.

If carriers stop doing that sort of thing for LTCI policyholders because, hey, LTCI didn’t work out for them, that makes all insurers look bad. If consumers see that insurers have given up on trying to provide good service for LTCI holders, why would they trust insurers to provide good service for holders of annuities and life insurance?

See also: LTCI Watch: Uncertainty

I think it would be better for insurers that want to stay in the game for the long haul to find ways to protect service levels — or clearly distinguish the good guys from the bad guys — than to wait for consumer groups and government officials who don’t know much about how insurance works to act.