While still relatively small, the employer-sponsored group long term care insurance market has been growing at a steady, if not dramatic, pace over the last few years. Comprised essentially of the same companies since the late 1980s, the group voluntary LTC insurance market has been extremely stable, based on results of Tillinghast Inc.'s 2005 Group Voluntary LTCI Survey.
In the most recent years, the number of in-force participants and employer groups in the employer-sponsored LTCI market has been climbing steadily (see Exhibits 1 and 2), but at a slower rate than in the past, studies by LIMRA show. The average number of participants in a typical employer group has remained fixed as well, at about 300 participants (Exhibit 3) per group.
Stable and relatively high annual growth of 18% between 1987 and 2001 has been replaced by a more volatile trend pattern in the first half of the new decade.
The introduction of the Federal Long Term Care Insurance Program in March 2002, which made the insurance available to U.S. government workers, caused the significant jump in sales of 223% in 2002. Due to a large backlog of applicants, a big portion of the new certificates were issued during 2003, which became the strongest year for the group LTC insurance industry (20% more sales than during 2002). From March 25, 2002, through March 31, 2005, 218,890 employees, retirees, relatives and others were enrolled in the federal program, making it the largest in the nation.
The sales decline of 73% in 2004 was attributed to the sharp differences in sales in 2003 after the enrollment in the federal program was complete. Hence, this value represents a relative decline in the LTC insurance market from the prior year rather than an absolute decline. The 2005 market experienced a slight upswing with a positive growth of 12%.
