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Actuaries post LTCI terminations study

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The Society of Actuaries (SOA) and LIMRA have completed a project that could help insurers and policymakers fill in the gaps about how private long-term care insurance (LTCI) really works.

The SOA and LIMRA have published a set of databases full of information about U.S. LTCI policy terminations completed from 2000 through 2011, and a report describing the contents of the databases.

Marianne Purushotham, an actuary at LIMRA, is the official author of the policy terminations databases report.

The team that managed the LTCI experience project received LTCI experience data for the period from 2000 through 2011 from 22 LTCI carriers. The participating carriers account for about 75 percent of the people covered by U.S. LTCI policies.

See also: Actuaries chart the LTC universe

Analysts at Towers Watson converted the insurers’ data submissions into three industry experience databases. One deals with claim incidence, another with claim termination, and the third with policy terminations.

Experienced project managers ended up including data from 20 of the carriers in the policy terminations databases. The database designers have created separate databases for information about policies that lapsed because the holders stopped paying their premiums and paying the policies that lapsed because the insureds died.

Users can break the data down by many different variables, such as policyholder age, gender and rate increase status.

Use of the voluntary terminations spreadsheet suggests, for example, that the LTCI policyholders affected by rate increases may be more likely than others to keep their policies.

The voluntary lapse table shows that the overall study period lapse rate was about 15 percent for consumers not affected by rate increases and 5.1 percent for those affected by increases.

In 2011, the lapse rate was 3.8 percent for policyholders not affected by rate increases and just 2.6 percent for those affected by rate increases.