It seems like only yesterday that I was waking up to the New Year contemplating plans for business and personal development. Now as I stare April 15th in the face I’m left wondering where the first one-third of the year has gone? There is good news to report and many changes that bode well for our business and industry in general, which I will get to in today’s report and the coming weeks. However, let me start by thanking all of you who have helped us make Q1 of 2009 one of our best submitted and paid business quarters in quite sometime. This follows a robust Q4 of 2008. We appreciate all of you for continuing to spread the message that the long-term care risk is real and requires management.
While consumers are concerned about the future viability of the financial institutions they have come to rely upon they also recognize that they cannot exclusively count on their home equity and investment portfolios to pay for care when they need it and are willing to purchase some amount of protection for the peace of mind that it provides. Sell up not down. Getting some coverage in place today is the ticket. Stacking long-term care insurance policies of various benefit designs, purchased over time, will be the planning mode of the future. As the market evolves we will have new long-term care planning tools that include traditional policies and linked benefits to satisfy the consumer’s needs.
The most frequently asked question I’ve been fielding of late is regarding the financial viability of the long-term care insurance companies that we represent. My general and sincere response is it that I don’t know any more than the general public; thankfully I am not privy to insider information and my attitude towards the rumors that I hear, along with the rest of you, is general skepticism. However, I have given some thought to the matter so let me share some of these with you:
- We need to separate our concerns into two categories; (a) do the carriers have the ability to make good on their promise to pay claims on existing in-force policies and (b) will long-term care insurance continue to be a viable product line for the companies currently in the business?
- In response to (a) above I think that one of the best gauges of a carrier’s ability to pay claims is their Risk Based Capital ratio. If you follow the link you can get more detailed information but essentially this is a number, calculated by the NAIC, that measures an insurance company’s ability to support its business operations. Anything over 100 is good but the higher the number the better. At last check, all of our long-term care insurance companies were in the 300 to 600 range. I’ll be updating our carrier rating chart sometime this week and if you’d to like to receive it, email me,barry@paradigmins.com or your BJFIM/Paradigm marketing representative. My opinion, for what its worth, is that our current long-term care insurance companies, baring some unknown economic calamity, have the ability to pay their claims on in-force business.
- (b) Above is a tougher question to answer. I don’t have a crystal ball or a hotline to anyone who can look into the minds of corporate executives or the future of how our current insurance carriers will position long-term care insurance in their portfolios. For most, LTCi is a small component of their overall operations. This can be good and bad. For a few, it is a large piece of their business which means that, in my mind, they are likely to stay the course. I do believe that regardless of the variables, long-term care insurance, in one form or another will continue to be an important product for a growing number of companies. These products will continue to evolve and will reflect the realities of the risk and the best way to manage it. I can tell you this, however, today is the best time to purchase traditional long-term care insurance. It will never be a better buy and will never cost less. Your clients and prospects need to hear this message loud and clear every time you speak with them.
The one long-term care insurance company that seems to be getting the most unfavorable press has been Genworth. For those of you who would like to read a very detailed March 27, 2009 Genworth Investor Review, have at it. I believe that it is generally positive as it pertains to Genworth but honestly most of the information, particularly without a narrative, goes beyond me.
Recently I returned from the annual Intercompany Long-Term Care Insurance meeting. I will share my observations of that in my next posting.
If you have any questions or comments please email me directly at, barry@paradigmins.com.
I would like a copy of the carrier rating chart when you have it available.