LTC Bullet:  LTCI Update from Broker World

Friday, September 25, 2015


LTC Comment:  Broker World magazine has published its annual long-term care insurance surveys for 2015.  Highlights after the ***news.***

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Just this week, our LTC Clippings  documented (1) how higher cancer incidence combines with declining cancer death rates to increase the future need for long-term care; (2) how the million dollars a typical couple can expect to receive from Social Security and Medicare is inadequate and must be supplemented by private LTCI; (3) how millennials are a target-rich demographic for LTCI sales; (4) how a dearth of geriatricians threatens care for the aged who are unable to command access by paying privately; (5)  how and why debt is spreading like a malignant tumor among the elderly making LTCI protection more important than ever; (6) how a stand-by line of credit on home equity could make LTCI premiums affordable for millions more prospects; (7) how boosting the Medicare eligibility age would devastate state Medicaid programs making the welfare LTC safety net even worse than it already is; and much more.

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LTC Comment:  Every year Broker World magazine publishes surveys of traditional and worksite long-term care insurance.  The surveys’ authors are well known LTCI experts, Claude Thau, Dawn Helwig, and Allen Schmitz.  We’ve culled a few highlights from this year’s surveys below.  Check out all the details in the July and August issues of the magazine.  Be sure to subscribe to Broker World if you haven’t already.

It’s clear from the following data that the private long-term care insurance industry continues to face daunting challenges.  On the other hand, it is equally true that private LTCI is playing a bigger and bigger role in financing extended care as its policies mature and claims increase.  What the future holds is anyone’s guess, but a likely scenario is that publicly financed long-term care will face harder times, and the obstacles holding back LTCI will retrench.


Excerpts from “2015 Long Term Care Insurance Survey,” Broker World, July, 2015

  • “The 15 carriers that reported individual sales to this survey sold 133,660 policies ($316,522,515 of new annualized premium) in 2014. We estimate that these carriers sold more than 99 percent of the stand-alone LTCI industry’s 2014 sales.”
  • “Five insurers increased sales, three of them by 50 percent or more. However, continuing past trends, stand-alone LTCI sales dropped 23.8 percent from 2013 in terms of lives insured and 21.8 percent in terms of annualized premium.”
  • “Because of the strong persistency of LTCI business and in-force policy price increases, in-force premium increased 2.6 percent from year-end 2013 to year-end 2014 , and the number of insureds increased 0.8 percent, despite low sales.”
  • “LTCI sales have surged temporarily on the eve of price increases (including shifts to gender-distinct pricing) and benefit discontinuations. Absent those surges, sales would have been lower.”
  • “Nonetheless, there are hopeful signs for stand-alone LTCI. A major insurer that has been relatively inactive in LTCI the past couple of years is aggressively marketing an innovative new product. Another insurer will enter the market later this year with lifetime benefit period, a single premium alternative and term life insurance riders.”
  • “The placement rate dropped to an all-time low (60.9 percent, including work-site cases which sometimes permit easier qualification), despite a significant drop in cases above age 70. Thirty-three percent (32.9 percent) of such applications were declined, withdrawn or suspended. Many observers feel that higher prices result in a less healthy pool of applicants and that insurers have tightened underwriting.”
  • “The LTCI industry has had a much bigger impact than indicated above, because a lot of claims are paid by insurers that no longer sell LTCI. According to the NAIC’s report for 2013 (the most recent report available when this was written), the industry incurred $8.2 billion in claims in 2013, boosting the industry to $89.4 billion of claims incurred since 1991.”


Excerpts from “2015 Analysis of Worksite LTC Insurance,” Broker World, August, 2015

  • “In 2014, participants reported sales of 13,460 worksite policies for $20.1 million of new annualized premium, a 3.9 percent drop in policies sold, and a 14.6 percent drop in new annualized premium compared to 2013. The worksite sales decrease (especially in policy count) does not look bad compared to the total sales decrease of 23.8 percent in terms of policies and 21.8 percent in terms of annualized premium. While the average premium for sales ‘on the street’ increased, the average worksite premium per policy dropped 11 percent, from $1,684 in 2013 to $1,496 in 2014.”
  • “Reported WS LTCI sales accounted for 10.2 percent of the policies sold in the industry (up from 8.0 percent in 2013) and 6.1 percent of the annualized premium (up from 5.8 percent).”
  • “The number of policies per case was particularly interesting. Two carriers reported an average of 34 to 35 policies per case. Two others reported an average of two policies per case. Selling executive carve-out LTCI to just one or two owner-employees and their spouses may become more difficult because of the shift to gender-distinct pricing.”
  • “Only 41.7 percent of WS policies met partnership qualifications (down from 51.6 percent in 2013 and 57 percent in 2012), compared to 50.2 percent in the NWS market.”