Long-Term Care Insurance Market Updates

We write on a few articles from the past week that we found interesting.

A recent article from Susan K. Neely, President and CEO of the American Council of Life Insurers, “Helping Older Americans Stay in Their Homes,” looks at challenges facing the long-term care insurance market as COVID-19 concerns continue and more and more people consider long-term care their greatest financial concern behind retirement savings. She also discusses how lawmakers are looking for ways to help more people get long-term care insurance.

Read the full ACLI IMPACT article.


In addition, we want to bring your attention to a new Best’s Market Segment Report, “U.S. Long-Term Care Product Performance Pressures Continue.” According to the report, from credit reporting agency AM Best, loss ratios in the LTCi market continue to climb and “poor performance from inadequate pricing is a significant issue for LTC insurers, owing to low interest rates, lapse rates, improving mortality, rising morbidity and policyholder utilization assumptions.”

The Report also looks more closely at certain factors driving rate increases nationwide, the evolution of combo products to meet growing coverage demand and efforts of the National Association of Insurance Commissioners to stabilize the LTCi market. Although, “AM Best views this as a very difficult task given the state-by-state insurance regulatory structures in place, and expects continued use of closed blocks to separate the legacy liabilities from the new ones in order to increase transparency to outside users of financial statements. AM Best also expects LTC insurers to trend toward simplified policy design and fewer assumptions embedded in their policies. Along with carriers slowing down on offering lifetime benefits coverage and inflation-adjusted features, insurers may also soon begin to disregard lapse rates as an underlying assumption for product pricing.”

Read Best’s Market Segment Report. (Subscription Required).


Finally, in “How low interest rates are changing LTC Insurance products,” Tom Rieske, Jr., Managing Director of LTCi Partners, discusses historical trends in LTCi sales (i.e., the trend toward sales of hybrid life and LTC insurance products) and recent reactions to the persisting low-interest rate environment (e.g., development of a hybrid IUL policy with LTC coverage).

Read the full LTCi Partners article.

About the Author: Stephen A. Serfass

A nationally recognized authority on long-term care insurance, Stephen Serfass helps clients develop their businesses and resolve challenges that could impede growth and financial performance. As former in-house counsel at a leading insurer, Steve prioritizes risk mitigation and financial economy when defending clients in class actions and individual litigation. Visit Stephen's full bio on the Faegre Drinker website.

About the Author: Christopher F. Petillo

Chris’s insurance litigation experience includes coverage and extra-contractual disputes in state and federal courts across the country, involving life, long-term care, annuity, and property and casualty policies. Substantively, Chris’s litigation focuses on life insurance pricing issues such as cost of insurance, fraud (including rescissions), broker misconduct, lapse and reinstatement, civil RICO, and claims disputes. Visit Christopher's full bio on the Faegre Drinker website.

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