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Actuaries chart the LTC universe

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A team of actuaries at the Society of Actuaries (SOA) is trying to help the long-term care (LTC) planning community with a chronic problem: A lack of credible, generally accepted, non-proprietary long-term care insurance (LTCI) claim data.

Insurers in the LTCI market have typically used their own claim data and bought data from vendors, but they have lacked access to the kinds of standard tables available in the life insurance and disability insurance markets.

The lack of standard tables may contribute to the difficulties LTCI issuers and issuers of other LTC planning products face with predicting how likely people are to need LTC benefits and how long they will need the benefits. Those difficulties may increase the cost of the products agents and brokers can sell to their clients — and increase the odds that surprises will force the issuers to accept large losses or raise rates.

Representatives from the SOA briefed the Health Actuarial Task Force — an arm of the National Association of Insurance Commissioners (NAIC) — on their LTC 2000-2011 Claim Termination, Incidence and Utilization Study at the recent NAIC meeting in Washington.

The SOA reps said the goal of the project is to create experience basic tables for LTCI claim terminations, claim incidence, and use of LTCI benefits. The analysts working on the project are also developing LTCI experience databases, with data reflecting both figures for total lives and for figures broken down by whether the LTCI insureds analyzed are collecting LTCI benefits or not yet collecting LTCI benefits.

The analysts are drawing on large batches of data for 2000 through 2011 from many companies. The claim incidence statistics, for example, include 15 million years of exposure to claim risk and 172,000 claims.

The claim termination data includes 4 million months of claim exposure, 215,000 unique claims, and 140,000 claim terminations.

The SOA completed work on developing the databases in October. The hope to complete work on the experience tables to be based on the databases in March.

See also: SOA: 41% of Pre-Retirees Want LTCI