Just Saying No to LTCI Rate Hikes Won't Work: Regulator

1. Treat market conduct examiners well.

Stephanie Duchene of Mayer Brown LLP, Michele Jordan of John Hancock, and Allison Kusel of Genworth appeared at a panel on market conduct examination procedures and trends.

A market conduct exam looks at an insurer's pricing and marketing strategies, in an effort to protect consumers and maintain public confidence in insurance.

The panelists talked about the need to give state insurance departments' market conduct examiners the data and other resources they need to conduct their exams, and to maintain a cordial, professional relationship with the examiners.

Jordan said she always John Hancock's responses to examiners' questions to make sure the responses answer the questions in a concise but complete way.

"Don't skimp," she said.

The panelists also discussed the need to consider, in an age of open offices, how market conduct examiners will be accommodated when they show up.

All of the panelists agreed that, no matter what kinds of arrangements a company's own workers have, market conduct examiners need offices with doors.

Duchene said market conduct examiners will be appreciative if the office is well-ventilated.

Jordan said the examiners' office also should have a lock, a desk, a telephone, a printer, a scanner, and, if possible, windows.

She remembered one examiner walking into the examiners' office at her company and being pleasantly surprised. "There's a view?" the examiner asked. "Normally, they put us in the basement."

2. Reinsurers are not going to buy all of insurers' bad old blocks of LTCI business.

Tom Gallagher of Evercore ISI said the problem is that the reinsurance will usually be too expensive for insurers and reinsurers to close deals.

To close a typical LTCI block transfer deal today, an insurer would have to hand the reinsurer the block's reserves, and an extra payment that amounts to about 50% of the reserves.

"Most companies are not prepared to absorb that," Gallagher said.

3. LTCI issuers, and life insurers and annuity issuers, should go beyond recognizing that some insureds have dementia.

Dr. Anitha Rao, a neurologist who specializes in dementia care, came to the ILTCI Conference to promote Neurocern, a digital system she has developed that can automate the process of conducting a thorough neurology exam interview.

The system asks a patient's caregiver a series of questions.

The system then determines what kind of dementia the patient is likely to have, provides a life expectancy estimate, predicts what the patient's care costs might be, and offers some ideas about care management.

The system is necessary because insurers now rely heavily on screening tools that indicate whether a patient has some kind of mild, moderate or severe impairment, and nothing else, Rao said in an interview at the conference.

Primary care doctors rarely have enough training or experience to diagnose dementia properly, and there are only about 600 neurologists who specialize in dementia care in the entire country, Rao said.

One result is that patients with forms of dementia other than Alzheimer's disease often get inappropriate treatments for their conditions, and another result is that insurers often have only a vague idea of how their insureds' with dementia are doing, Rao said.

By providing more precise information about the insureds' state of brain health, "we're de-risking dementia," Rao said.

— Read NAIFA Launches Long-Term Care Planning Center, on ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on LinkedIn and Twitter.