Long term care (LTC) insurance and life settlements, once clinging to the ledges of the life and health insurance industry, now appear to be climbing back, experts say.
LONG TERM CARE INSURANCE
Despite recent setbacks such as rate increases on in-force policies by major carriers and the departure of MetLife Inc. from new sales, executives in the LTC insurance business confidently predict encouraging developments:
A return to growth. After several years of poor sales, sales of both individual policies and products for the small and medium worksite market will grow, says Jesse Slome, executive director, American Association for Long Term Care Insurance.
Overall, however, total LTC premiums may not increase much this year, because more people are buying lower levels of coverage, he says.
"With all the changes in the carriers, products and programs like CLASS, it is difficult to know what will happen," observes Marianne Harrison, president of John Hancock Long Term Care, part of Manulife Financial Corp., Toronto.
(CLASS is the Community Living Assistance Services and Support Act, requiring employers to make a government LTC insurance plan available to employees.)
"One thing for sure, though, is that the need for long term care continues to grow."
Malcolm Cheung, vice president of long term care product and risk management for Prudential Financial Inc., thinks 2011 "will probably be an up year in individual long term care and likely on true group as well."
Pru's LTC sales particularly in the individual market rose in 2010 at least 30% over 2009 "and really picked up in second half," he says. "But whether that continues, I don't know."
In group sales, Cheung predicts that MetLife's exit from new sales and Hancock's recent suspension of group sales will enable Pru to boost its share of market.
Michael Gallo, senior vice president of long term care insurance for New York Life Insurance Company, says, "We are very bullish and looking to grow. We are increasing efforts to educate the public and agents about the need" for LTC insurance.
"What agents and distributors decide to do affects the results we see," observes Bill Jones, president of MedAmerica Insurance Company, a unit of Lifetime Healthcare Inc., Rochester, N.Y. "When a major carrier exits or asks for a significant rate increase, that makes distributors nervous. If they stop bringing up the issue of long term care to prospects, that affects the industry."
"Next year, our sales will increase double-digit," confidently predicts Steve Sperka, vice president of LTC for Northwestern Mutual Life Insurance Co. "If we grow 20%, I wouldn't be surprised."
Peter Gelbwaks, president of Gelbwaks Executive Marketing Corp., Plantation, Fla., says "the industry has the possibility of a significant turnaround." He wants the industry to send a strong message that "we have viable carriers with good ratings and a commitment to market, that there's no better time to buy than today, and putting off a decision to buy is a mistake."
Tom Riekse Jr., managing principal of LTCI Partners, Madison, Wisc., says his brokerage agency is planning for double-digit percentage growth in 2011.
