Jim Glickman is trying to get insurance company executives to think less about the problems with older long-term care insurance (LTCI) products and more about new, tougher LTCI products’ potential.
Glickman is the president of LifeCare Assurance Company, an LTCI reinsurer. The company will handle LTCI underwriting and administration, and shoulder some of the claim risk, for a direct writer that agrees to sell the LTCI policies consumers and assumes at least half of the risk.
See also: As LTC Grows, So Will Reinsurers’ Role
Glickman is doing that job as insurers continue to suffer from problems with old LTCI policies that have performed poorly.
“It’s a challenge,” Glickman said in a recent interview.
But several insurers are looking into the possibility of setting up new LTCI programs, and “the market of 20 years ago, which had a lot of problems, is not the market of today,” Glickman said. Meanwhile, the need for LTC financing solutions is obvious, and growing.
For five other reasons Glickman is still looking for insurers setting up new LTCI programs, read on.
1. The Society of Actuaries analysis.
Last year, Roger Loomis, an actuary, compared new LTCI products with older generations of LTCI products. He used statistical modeling techniques to try to estimate how the new products might have performed if they had existed years ago. He also looked at how the current LTCI products might perform in a wide range of scenarios.
He found that the current products probably would have done much better in the past than the products actually sold did, and that the current products should do well in the future.
Glickman said the Loomis analysis shows that the LTCI market has nowhere to go but up.
2. The Federal Reserve Board raised the symbolic interest rates it controls by a quarter of a percentage point in December. Those were the first interest rate increases the Fed had announced since 2006.
Financial market turmoil could force the Fed to back away from announcing additional increases any time soon. Rates of return on the kinds of investment products that LTCI issuers typically buy “haven’t yet made any moves at all,” Glickman said.
But LTCI issuers depend heavily on income from investments in bonds. Glickman said even a half-point increase in rates on the kinds of bonds LTCI issuers buy would spur more activity.
3. The SOA’s Intercompany Long Term Care Insurance (ILTCI) conference continues to be popular.
“Attendance is still growing every year,” Glickman said.
The SOA attracted about 1,000 to the ILTCI conference it held in Colorado Springs, Colo., in March 2015, and it expects to attract a similar crowd to the ILTCI conference it’s holding in San Antonio in March.
See also: 5 views from the LTCI bleachers
4. Even rich countries with generous single-payer health care systems are starting to talk about a need for tapping private savings and insurance benefits to pay for long-term care (LTC) services.
France, for example, is famous for having a single-payer health care system and a public system for paying for LTC services.
Now, Glickman said, France is trying to figure out how to get more people to help pay for their own long-term care.
5. Congress is… what it is.
To create a sustainable public LTC benefits program with much of an impact, Congress would have to make it mandatory, or allow medical underwriting, or both.
Glickman doubts Congress is going to approve a program like that any time soon.
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