I’ve just returned from our industry’s professional annual gathering which I believe represents our faithful and permanent commitment to keep trying. The ILTCI 2023 was in my humble opinion a smashing success. In no particular order of importance an inventory of why may have merit in your forward thinking, planning and prioritizing:
- It was the largest attendance in years with almost 1000 stakeholders who remain concerned about the insurance care conundrum.
- It was a diverse professional assemblage, grounded again by the avatars of good math.
- The progression of claim efficiency and quality of service truly benefiting by the evolution of technology was clearly on display. Gains were evident in virtual underwriting and there were even successful robotics teetering on the edge of Artificial Intelligence advancements.
- There were multiple vendors helping to define the meaning and parameters of what should be the true Holy Grail–efficient humanized quality managed care and claim adjudication.
- But the best clues to predict a better future were all the eager bright shiny faces attending every session. A third of those present were there for the first time and over half had been attending for less than three years. Only one percent had been in attendance for 20+ years.
Helping to represent that one percent, my partner Barry Fisher and myself had been asked by the meeting chair Steve Schoonveld to reminisce about our vast, perhaps simply lengthy, experience to provide what could best be described as comic relief. Steve asked us to help conclude the meeting by being humorous and optimistic. As this was a large public forum we were asked to also remain non-denominational, non-sectarian, apolitical and keep it under 20 minutes.
Interestingly, as insurance company consultants for many years, we are used to being asked the impossible and to come in under budget.
We began by proclaiming we were going to attempt to explain two of the greatest mysteries of our little corner of the insurance marketing universe. First: Why my partner continues to accuse me of writing the same column month after month for almost 20 years. Second: How two clearly diverse Class A personalities have been able to work successfully together for this long. Actually the answer to both rhetorical questions is the same. We are simply unable to give up our quest to understand, “Why in the Hell can’t we get this right?”
We began by suggesting, as I have repeatedly in this column, that we didn’t just miss the side of the barn but that we may have been aiming at the wrong barn. We have continued to make this about financial indemnification. In my humble opinion it is about who and under what circumstances the claim journey will be managed. I have suggested many times in this column that sales begin with those who have been touched by the caregiving angel. It is a predisposition to buy that gives sales success any hope of self analysis. My partner added that our market was never given enough time to establish itself in the pantheon of mandatory risk abatement vehicles. That consumers have yet to understand their personal responsibility. That with the incessant background noise of rising premium the market abandoned the middle class buyer that the product was originally designed to serve.
We reminded the audience that producers have clearly identified this as the most difficult of insurance sales yet, frankly, the product manufacturers of this world have never banded together to publicly support this crusade.
It was pointed out that many agents have retired from the field of battle and that fresh troops may not be coming from the plethora of financial advisors/planners who seem to have moved insurance transactions to the caboose.
It was impossible to not reflect on the past and to some extent we may just have been a couple of curmudgeonly aging rock stars brought out to entertain the troops.
There was laughter and applause perhaps not from our discourse but from our longevity. The hard truth is the answer to a brighter future was in that room. We knew it and they knew it.
Other than that we all had no opinion on the subject.
Statistical Conundrums
My required statistics classes were the nightmare of my academic journey. Means, modes and medians gave me numerous sleepless nights. I was never really comfortable with the fact that “on average” would never again ring automatically true in my mind. Frankly graduate school was an endless parade of research findings analysis. I learned early to briefly scan these exercises of self fulfilling prophecies. First layout what you will try to prove by conducting a hopefully unbiased statistical analysis and magically the conclusions invariably support the initial question. This is now where the real problem begins, I was never interested in a sterile mathematical body count. I wanted to know what the meaning of that end fact is, the one held up proudly to the light of truth and introspection.
I recently came across some excellent consumer research from the Milken Institute Center for the Future of Aging and Innovative Finance. The statistics presented were big, bold and moderately helpful in understanding why long term care is bigger than a bread box and, considering the trajectory of current marketing efforts, perhaps not smaller than an elephant. Which leaves me, however, as confused as ever as to what they may mean, to whom, and under what circumstances.
Fifty-two—the percentage of adults 65 and older who will require a high degree of long term care. We have all quoted the “70 percent will need some level of care” statistic. I’m not sure we have adequately condensed understanding the risk to the flip of a coin. Betting red or black at a casino roulette wheel does concern the house that they will lose money. So serious long term care risk becomes defined as heads you win if you have an abrupt mortality event and tails you lose and your precious retirement savings are decimated.
Two times—twice your annual income will be required for one year of nursing home care. And I might add nursing home costs are inflating at over five percent per year. Not so sure wages will keep pace. What strikes me is even this is too big a number to honestly understand or provide an adequate step in a buying decision tree. Average savings in an American’s 401k is basically half that average six figure income. Americans understand they are unprepared for retirement; the fact that they have no insurance on a non-existent retirement account is a moot point after all.
Twelve—the number of LTCI carriers today after a high of more than 100 about 20 years ago. This has been flogged enough. We innocently underpriced. We tragically underestimated that, once sold, the sale stuck hard. Investments underperformed and the industry’s built in protection mechanisms required insurers to strengthen reserves. At this point the exodus was unstoppable. Claims rose, interest rates fell, the perfect storm descended; perhaps we were just another victim of global warming. Underwriting in my humble opinion remains the most onerous in insurance history. Rate increases became the hot stove where agents and consumers were required to burn fingers and in many instances jeopardize long standing relationships. Remember this was always supposed to be a happy medium sale. The market was created for the middle class—those with the most at risk. The last 20 years have left the companies with few options. Price new sales adequately, remove non insurance benefits and try to stabilize past blocks of premium with additional income. The rise of combo sales is commendable. However a very small number of options are complete with a health 7702B rider relying perhaps too heavily on chronic illness riders which may provide some marketing cover but may also impede an aggressive claims administration. Now let’s try to make sense of who pays:
The statement that Medicare does not pay for care is no longer completely true. Some home care service expense is picked up by Medicare and a growing number of Medicare Advantage plans have some limited managed care benefits. Alright no matter how your brain processes those numbers the truth should be shouting at you. Since the advent of modern TQ comprehensive LTCI our sales success has not been sufficient. Even pulling out the social safety net leaves you with the fact that the majority of Americans are clearly exposed to a financial and emotional conflagration. The Goldilocks principle must guide our efforts. Self insurance and government dependence delineate the opposing goalposts with a massive open and virtually empty football field of sales opportunity in between. We have constantly drifted from our original intentions of maintaining the quality of claim control for the middle class. The very cohort outlined so vividly and statistically spot on above. Regardless of how you or your client arrive at your own happy middle ground, on average the problem is real and the solution is painfully obvious.
Other than that I have no opinion on the subject.