I recently had the privilege of speaking to the board of directors of one of the handful of courageous LTCI companies that have chosen to stand and fight. Their concerns were a reflection of the same valid soul searching that we all have to be going through. It is almost impossible to look at the rise and fall of LIMRA numbers over the last 15 years and not question your commitment and your sanity.
The questions that seem to continue to beg for an analysis are: Why do sales continue to fall? Why have so many left the field of combat? The problem is those are the wrong damn questions!
The questions should be: Where have the chronic illness risk abrogation sales relocated and why? Why have some companies stayed the course and why have a substantial number decided to throw in the towel?
Perhaps a brief over simplified review of recent LTCI history is in order:
“The Great Company Exodus” deserves further analysis. Why did they leave? It was not related to the validity of the sale itself or any inherent flaws in the market or the product. Each company originally perceived an opportunity to serve a new market. They made their own unique decision to try to strategically answer consumer demand, perhaps accommodate their own distribution and hopefully make a profit. It was only the decision to move forward that was the same. Each one has subsequently left for their own indigenous reasons. Their decision to throw in the towel was based on issues which were unique to them, not LTCI.
There were as many reasons as there were defections:
None of this has anything to do with the value, importance or ultimate profitability of stand-alone LTCI! Insurance marketing stuff just happens and not every company was ever going to cross the finish line anyway.
It’s the corollary question that deserves the most attention: Why have some stayed and continue to work hard every day to find the right balance of competitive premium, accurately anticipated claims and empathy with the needs of distribution and at the same time stay committed every day to maintaining a strong value proposition for consumers and ultimate faith in the profitability of LTCI?
There is much that the LIMRA numbers do not show. Some examples:
And last but not least in any way, please get this straight: Sales are not down, they are flat. If you will just take a moment, stop looking at the market through your panicked fingers, and do some simple math you will notice that sales addressing chronic illness are as strong as ever. If you will simply add stand-alone LTCI to combo life sales and short term sales, the number of folks solving their risk problem or the number of companies actively engaged in chronic illness risk abrogation is actually fairly static. Premium and company commitment has relocated, it has not vanished. The sky is not falling it’s just a different color blue.
Other than that I have no opinions on the subject.
Ronald R. Hagelman Jr., CLTC, CSA, LTCP
CLTC, CSA, LTCP, has been a teacher, cattle rancher, agent, brokerage general agent, corporate consultant and home office executive. As a consultant he has created numerous individual and group insurance products. A nationally recognized motivational speaker, Hagelman has served on the LIMRA, Society of Actuaries, and ILTCI committees. He is past president of the American Association for Long Term Care Insurance and continues to work with LTCI company advisory boards. He remains a contributing "friend" of the SOA LTCI Section Council and the SOA Future of LTCI committee. Hagelman is president of Broadtower Insurance Solutions, a national IMO helping BGAs enhance LTCI production. Hagelman can be reached at Broadtower Insurance Solutions, Inc., 156 N. Solms Rd., New Braunfels, TX 78132. Telephone: 830-620-4066. Email: [email protected] Website: www.BroadtowerInsurance.com.