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Tom McInerney of Genworth at the New York Stock Exchange, on July 9, 2024

Life Health > Long-Term Care Planning

Genworth Unit Moves to File New Long-Term Care Policy

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What You Need to Know

  • The stand-alone long-term care insurance business has been through hard times.
  • Genworth's CareScout LTC provider network now has relationships with 400 home care organizations.
  • The new CareScout Insurance LTCI policies would provide a maximum of $250,000 in benefits.

Genworth Financial executives visited the New York Stock Exchange Tuesday to celebrate the 20th anniversary of Genworth becoming a stand-alone public company, ring the NYSE opening bell and talk about the company’s imminent return to the long-term care insurance market.

The company’s CareScout Insurance business is already sending information about a new stand-alone LTCI policy to the Insurance Compact Commission, an organization that processes product filings for 39 states and Puerto Rico, and it hopes to have the policy approved by the end of the year, Tom McInerney, Genworth’s chief executive officer, said Tuesday in an interview.

The first CareScout LTCI policy is expected to have a maximum benefit of $250,000; options for 1%, 2%, 3% and 5% compound inflation protection; extremely conservative investment-return assumptions for the assets supporting the policies; and a strategy of implementing small, frequent premium increases, when increases are necessary, rather than imposing the kinds of 100% and 200% increases facing the holders of many of the LTCI policies sold in the past.

The long-term care insurance industry “obviously got it wrong on the legacy business,” McInerney said. “We think we’ve now got a product that’s priced right.”

What it means: Private companies may be getting serious about reviving efforts to provide long-term care planning options.

The revival may be too late for many baby boomers, who are now all 60 or older, but it could create planning options for Generation X clients and those in younger generations.

The history: Genworth came to life as the insurance arm of General Electric. General Electric turned it into a separate company, with its own New York Stock Exchange listing, in 2004.

Companies acquired by Genworth helped create the modern LTCI market and were also large issuers of life insurance and annuities.

Most of the assumptions that Genworth and competitors made about LTCI coverage turned out to be wrong. Originally, issuers had hoped to avoid imposing any premium increases. But the companies ended up getting regulator approval for increases that ended up doubling or tripling the premiums for many products.

McInerney became CEO in 2013, as the severity of LTCI industry pricing problem was becoming apparent. He has been working to stabilize Genworth’s old LTCI business ever since.

The company tried to stay in the LTCI business, but it stopped selling new policies through brokers in 2019.

Genworth’s Enact Holdings mortgage insurance business has been the only company unit issuing substantial amounts of new business in recent years. But the company still serves about 1 million people insured by its LTCI policies and about 1.5 million holders of its in-force life insurance policies and annuity contracts.

After McInerney became CEO, he saw how caregiving works up close when rheumatoid arthritis limited the abilities of his own mother, who had no LTCI coverage. McInerney’s sisters took turns providing home care, and McInerney provided cash.

“Ultimately, it was very expensive,” he said.

The Genworth LTCI strategy: CareScout will sell the new policy through brokerage general agencies, financial advisors and the worksite market, and it hopes to make the product available throughout the country, including in New York state.

CareScout managers are planning to add products that combine long-term care benefits with life insurance and annuities to complement sales of the stand-alone LTCI products.

Genworth’s LTC provider network: U.S. health insurers typically work with networks of providers that have met the insurers’ quality standards and have agreed to offer the insureds medical services for specified prices.

In the long-term care world, some issuers have provided some advice services and access to listings of local service providers, but they have not typically offered contracted provider networks.

Genworth’s CareScout Quality Network is putting providers through a rigorous assessment process.

The evaluators start with state and federal licensing data but then look at many additional quality indicators, such as staff attitudes; staff training programs; liability insurance; and use of permanent, full-time employees.

The providers have agreed to provide discounts of about 10% to 20% to people who come in through the network.

CareScout has started by contracting with about 400 home care provider organizations in about 40 states. The business hopes to increase the number of contracted home care provider organizations to about 600. It plans to start adding assisted living facilities and nursing homes to the network later this year.

When a CareScout Insurance LTCI user files a claim, the company will offer the customer lists of the CareScout network providers in the customer’s area. Genworth hopes access to a provider network will make the process of finding care less stressful for the customer and help the customer use the LTCI benefits to pay for more care, McInerney said.

CareScout managers are also hoping to use their evaluation process to shape how care works.

One provider aiming to join the company’s network passed 19 of the 20 quality tests but failed the 20th. Once it realized that the 20th test involved having better liability insurance, it bought better liability insurance, according to Samir Shah, the CareScout unit’s CEO.

By setting care quality standards that can improve the care recipients’ quality of life, not just keep the recipients safe, “we will elevate the standard of care,” Shah said.

Tom McInerney. Credit: Allison Bell/ALM


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