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Actuaries feel for way forward at LTCI event

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Colorado Springs, Colo.

Actuaries are still trying to gather and organize the data they need to understand what exactly went so wrong with long-term care insurance (LTCI) assumptions.

The Long Term Care Section of the Society of Actuaries is leading several major efforts. LTC Section players talked about LTCI data projects here Sunday, at a meeting before the official start of the section’s 15th annual Intercompany LTCI Conference. This year’s conference has attracted more than 1,000 attendees. The list of sponsors includes insurers with big closed blocks of LTCI business as well as active LTCI issuers.

James Glickman, president of LifeCare Assurance Company, an LTCI reinsurer, told the section council about a project to study LTCI pricing assumptions.

Study organizers are getting information about the assumptions insurers were using in 2000, 2007 and 2014, comparing that with experience data, and trying to analyze the differences between expectations and reality. Six of the seven carriers approached provided data, Glickman said. 

Matt Morton of LTCG and Ben Williams of Towers Watson described how they gathered, cleaned and analyzed data for a major LTCI experience study. The study includes data on all sorts of real-world LTCI experience, including data on the number of claims filed and the number of claims that ended due to the death of the insured, the recovery of the insured, or expiration of benefits.

Twenty-two companies provided data, but, because carriers took such different approaches to reporting data, and study organizers wanted to create clean, standardized tables that would be easy for other analysts to use, they ended up using data from only about half of the carriers.

The current version of the tables contains information about 15 million “life years,” or years of life when consumers have the insurers’ coverage, $7 billion claims, and, and 200,000 claims, or about one claim for every 75 LTCI life years.

Early analysis of the tables suggests that differences in company experience performance had more to do with differences in policyholder mix than with differences in how the insurers operated, Williams said.

Vince Bodnar, chief actuary at LTCG, and John O’Leary, president of O’Leary Marketing Associates L.L.C., reported on an SOA LTCI think tank project. Bodnar said he and colleagues put off starting the think tank, because they found that many groups are developing LTC finance studies right now. “I didn’t want to have another one.”

One big project they discovered was an LTCI marketing study by the office of the Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services (HHS). Someone in the room asked whether the Internal Revenue Services (IRS) is playing a key role.

The IRS likely will play a key role when panels look at ideas such as creating some kind of LTCI product that would have a cash value, or come with a side fund with a cash value, O’Leary said.

See also: Actuaries chart the LTC universe


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