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Unum Sees COVID-19 Increasing LTCI Claimant Mortality

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COVID-19 is continuing to lead to noticeable changes in long-term care insurance (LTCI) claims, and it’s starting to affect group life and group disability claims.

Executives from Unum Group gave that assessment last week during a conference call when they went over third quarter results with securities analysts.

(Related: Centene Is Getting More COVID-19 Bills: Earnings)

Steve Zabel, the chief financial officer of the Chattanooga, Tennessee-based company, said COVID-15 caused the mortality rate for people collecting Unum LTCI benefits was about 15% higher than expected.

That compares with LTCI claimant mortality being about 30% higher than normal in the second quarter, Zabel said.

The incidence of new LTCI claims seemed to return to more levels in the second quarter, Zabel said.

“However, the month-to-month trends remain very volatile,” Zabel said.

The mortality level for LTCI insureds who were not on claims seem to be in line with expectations, Zabel said.

Rick McKenney, Unum’s chief executive officer, said that LTCI claimants seemed to be less likely than usual to move from one type of care to another in the third quarter.

Normally, some people who are getting LTCI benefits for home care move to facility-based care during a quarter, he said. In the third quarter, he said, “the movement from home care to facility care really slowed down dramatically.”

COVID-19, Group Disability and Group Life

Zabel said COVID-19 did lead to elevated short-term disability claims in the third quarter. About 900 more group life claims than usual have come in, or about 12% more deaths than Unum might have expected to see in a normal year, Zabel said.

Unum received about 1,100 more deaths than expected in the second quarter, or 14% more deaths than expected, as the country recorded 120,000 COVID-19-related deaths, Zabel said.

“Our rough estimate is that we expect to see approximately 1% of U.S. mortality by count, given our market share of life insurance in the country,” Zabel said. “While there continues to be a lot of volatility in these trends, all in all, we view these results to be largely in line with our expectations.”

The average death claims size — now “in the low $50,000 range,” according to Zabel — was a little higher than usual in the third quarter as well as the fourth quarter thus far, he said.

McKenney said the higher mortality level goes beyond Unum’s financial results.

“It reaffirms exactly why we are here, to take care of people at time of need,” McKenney said. “Our average death claim is around $50,000, and this maybe the only form of life insurance these individuals and their families have.”

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