New York  A long-term care insurance (LTCI) executive squared off today against a skeptical rating analyst at a Standard & Poor’s Ratings Services conference session on long-term care (LTC) products.

See also: S&P speakers look for the next big risk

The moderator, Li Cheng, an S&P senior director, set the tone for the panel by sighing and conceding that LTCI is a “difficult product.”

Michael Doughty, president of John Hancock Insurance, talked about the efforts his company and competitors have made in recent years to learn from bad experience and introduce products that help consumers but expose the issuers to a much lower level of risk.

He talked, for example, of efforts to develop products set up in such a way that the issuer will ask for modest increases on a regular basis, rather than applying for permission to impose huge increases every 10 years or so.

Doughty noted that he himself had asked, when he came in, why the company was still in the LTCI market. The answer, he said, is, “There is a huge consumer need.”

Neal Freedman, an S&P analyst who published a review of the LTCI sector earlier this week, acknowledged that the need is great, but he questioned whether private industry can play a major role in meeting that need.

“This is fundamentally difficult to price,” Freedman said.

Every two years, “every company comes through and scrubs their reserves,” and that raises questions about the companies’ financial strength, Freedman said.

Now, even if the LTCI issuers have successfully dealt with problems with assumptions about interest rates and lapse rates, they could face unpleasant new discoveries about morbidity, Freedman said.

Jeffrey Coutts, the corporate treasurer at Lincoln Financial Group, which has tried to meet LTC planning needs with a partly self-hedging product, by offering a life-LTC hybrid product, emphasized that Lincoln’s product is different in many ways from stand-alone LTCI.

But he suggested that insurer withdrawals from the market might make this a good time for new players to enter the stand-alone LTCI market with properly designed, properly priced products.

“You might look back in 20 years and say this is the best thing we ever did,” Coutts said.

See also: LTCI sales drop, but premiums hold steady