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Long-Term Care Insurers Reveal Early COVID-19 Effects

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What You Need to Know

  • Answers varied widely from carrier to carrier.
  • Some carriers had trouble answering the questions.
  • One carrier's answer suggested that the December 2020 numbers could be sobering.

The first two U.S. waves of the COVID-19 pandemic may have hit some U.S. long-term care insurance issuers’ customers hard and missed the customers of other issuers.

A team from Milliman Inc. has described the early effects of the pandemic on U.S. LTCI issuers in a new report prepared for the Society of Actuaries, with funding from the Senior Health Care Oversight Trust.

The Milliman Survey

The Milliman team conducted an LTCI issuer survey from November 2020 through January 2021, and their questionnaire covered the period from April 1, 2020, through Sept. 30, 2020.

The 15 insurers that filled out the questionnaires account for only about half of the U.S. LTCI policies in force.

LTCI insurers call insureds who have not filed claims and are still living in the community “active lives.”

Here’s how the participating insurers described the impact of the pandemic on active life mortality:

  • Increased by 5% or More: 6 insurers
  • Unchanged, or Changed by Less Than 5%: 3 insurers
  • Decreased by 5% or More: 1 insurer
  • No Data Available: 5 insurers

Here’s how the insurers described the impact of the pandemic on the death rate for people who were already receiving LTCI benefits:

  • Increased by 5% or More: 1 insurer
  • Unchanged, or Changed by Less Than 5%: 3 insurers
  • Decreased by 5% or More: 8 insurers
  • No Data Available: 3 insurers

Only four of the insurers answered a question about how the pandemic had affected overall use of LTCI benefits. One said the pandemic had increased benefits use by 5% to 10%, two said the pandemic had decreased claim utilization by less than 5%, and one said the pandemic had no observed impact on use of benefits.

The Background

A severe COVID-19 wave hit the New York City area, Boston, New Orleans and other communities hard in March and April, and a second, much smaller wave hit other communities, especially in Arizona and Texas, for a few weeks starting around mid-June 2020.

A third wave swept over most of the country from early December through mid-February. That wave filled hospitals to capacity in the Los Angeles area and much of the upper Midwest.

Executives from some publicly traded insurers with large blocks of LTCI business have suggested that the pandemic had increased the death rate for people with LTCI coverage and decreased the odds that insureds would file claims, either for paid home care or for nursing home or assisted living facility bills.

The Future

Milliman did not ask survey participants about what they had experienced after Sept. 30, 2020, but one wrote: “Disabled life deaths spike much higher during the fourth quarter 2020 vs. previous years. Prior, disabled mortality was fairly normal.”

That reply could be an indication that the effects of the third wave of the pandemic on LTCI issuers could be different from the effects of the first two waves.

The Milliman team emphasized in its report that it believes further survey work is necessary to assess the impact of the surge of COVID-19 sickness and death that occurred after September 2020.

But survey participants expressed little enthusiasm about participating in more surveys.

Only seven LTCI issuers said they’d be open to participating in a similar survey in the future. Just four said they’d be willing to participate in a deeper study.

(Image: Katarzyna Bialasiewicz/iStock)