|LTCI in 2015: Why There’s Cause for Optimism|
Several members of NAHU’s Long-Term Care Advisory Committee attended the 15th Annual Intercompany Long Term Care Insurance (ILTCI) Conference in March. Our committee’s members are all heavily involved in the LTCI market.
I noticed the mood at this year’s conference seemed a lot less pessimistic than it was last year. In 2014, we saw unabatingly poor press coverage of LTCI. Media gave inadequate and adverse explanations of LTCI rate hikes, with little advice on constructive ways to amend them. New sales of traditional LTCI decreased. We saw higher premiums, tighter underwriting and LTCI carrier withdrawals. 2014 was the worst year I can remember for LTCI in my 25-year career.
In short, the LTCI market couldn’t get any worse than it was in 2014.
At the conference, I learned that there were more legitimate reasons, beyond my senses alone, to be hopeful about the future of LTCI. While my observations are based on anecdotal experience, it was very reassuring to learn that actuaries agree with what I think most full-time LTCI marketers observe. Here is why there’s cause for optimism about LTCI: the problem of who will provide LTC and how to pay for it is not going away. In fact, it’s like a freight train coming at us.
The LTCI market is now expanding, not contracting. Two new LTCI carriers are in the process of entering the LTCI market.
In the news you will now find plenty of stories advising people that Medicare cannot and will not pay for LTC. You will also find articles about looming budget shortfalls and cutbacks, stories graphically describing the sacrifices families make to provide care for loved ones who don’t own LTCI, and stories about our rapidly aging population, lack of caregivers and impending Alzheimer’s epidemic.
After all these years, most journalists still have a scant understanding of how LTCI works. LTCI is seldom mentioned in news stories and still doesn’t get the accolades it deserves. However, all other indications look good for the future of LTCI.
In his general session presentation at the ILTCI Conference, Roger Loomis, an actuary with Actuarial Resources Corporation, explained why I believe my suspicions about LTCI’s brighter future are correct. Mr. Loomis’s presentation was about the actuarial outlook on the stability of current LTCI rates. He made several key points: higher LTCI prices are more stable, the industry now has time to learn and benefit from its experience, the LTCI industry has more data to support pricing assumptions, less risky product designs are being offered, skill at managing LTCI is better and there are better modeling tools. Mr. Loomis used reporting from seven large insurers who have been in the LTCI market for at least 15 years to back up his statements. He concluded that LTCI presently sold has a relatively low (approximately 12%) probability of a rate increase, due to near rock-bottom lapse and interest rate assumptions, plus other factors.
Anyone wanting the slides from Roger Loomis’s presentation should email me at email@example.com.
I can’t remember of a better time to start selling LTCI!