The Senior Issues Task Force (“Task Force”) of the National Association of Insurance Commissioners (“NAIC”) held a public hearing on long-term care insurance (“LTCI”) at the NAIC Fall National Meeting in Washington, DC. During the hearing, a panel of experts discussed issues impacting the LTCI industry, including the impact of the economy on LTCI sales, increases in rates by private insurers, and the exit by a number of carriers from the market.
Panelists included Andrew Melnyk of the American Council of Insurers (“ACLI”), Marc Cohen of LifePlans, Inc. (an LTCI services, risk management and research company), and Dawn Helwig of Milliman. Among other things, the panelists discussed the factors motivating companies to exit the market, including pricing complexities, distribution issues (with commissions often being heaped in the first year, thereby placing a strain on issuers), high capital requirements with respect to LTCI, and a difficulty in obtaining reinsurance. However, notwithstanding these difficulties, one of the panelists, Andrew Melnyk of the ACLI, argued that demographics will ultimately increase market demand for retirement products such as LTCI. Melnyk pointed out that greater longevity translates into more years outside the labor force. Furthermore, due to people having fewer children, reliance on children and family members for retirement support will become less viable, making LTCI necessary. He argued that the short-term difficulties facing the LTCI market may be outweighed by the long-term need for LTCI products.
Materials from the Task Force meeting are available here.