After previewing the preliminary third quarter LIMRA annualized LTC insurance figures, I must say that by any measure the industry is experiencing the best new premium production in almost a decade. This is grand, spectacular news!
The new numbers are amazing and historic. They will cause an incredible volume of speculation. The growth was dramatic across all lines of business. Combo sales in particular will now continue to transform the product landscape. Agencies and carriers that have ignored or decided to wait and see what the implications of the Pension Protection Act are, need to fall back and regroup immediately.
Amazingly, there will be a plethora of possible answers from inside and outside our industry. Yet the only ones who really know the truth are the veterans, specialists, marketing organizations and hard-core companies dedicated to LTC insurance.
There really is no one answer. During the last eight years all of the answers have appeared in this column. Therefore, one more time for posterity, let’s go over them.
1. Turmoil in the market with carrier retreats and departures last year meant that a significant portion of existing premium production had to find a new home. Activity in the brokerage market, regardless of its source, generates new premium.
2. The rising bombardment of care-giving events is becoming a cosmic asteroid shower from which there is no place left to hide.
3. Economic adversity and the almost lethal blows of 401(k) evaporation over the last four years have focused everyone’s attention on preserving retirement equity.
4. Demographics is destiny: Boomers are indeed beginning to retire or finally contemplate the inevitability of reduced cash flow, increased longevity and looming inflation.
5. There cannot be anyone left who seriously believes the government is now in a position to increase and expand the social safety net. Even those middle class opportunists that may have used subterfuge to “borrow” from Medicaid will soon find the cupboard bare. I remain absolutely, positively sure that those with money will take action to protect their money.
6. Needed structural innovations have also contributed to a more competitive and easily explained product. Product simplification, reduced benefit pools and competitive interest rate strategies have made it easier to explain what we sell. Alternative premium strategies with reduced benefits have helped to buffer sticker shock.
7. Multi-life sales are still booming; some insurance is better than no insurance. Spreading the risk has also allowed us to offer reduced underwriting for mild impairments, allowing many more to acquire some coverage otherwise not available.
8. Expanding combo product options forces the risk leveraging conversation across all product lines. Combo products do dramatically reduce net cost.
9. Every industry survey demonstrates the steady march forward of consumer awareness both individually and at the worksite. Partnership training has also enhanced the number of agents prepared to be helpful.
We, the stalwart supporters of the cause, knew and never lost faith in the absolute certainty that a time would come when our momentum would again stagger forward. A time when LTC needs would become the beginning of a conversation, not the end…an era of established need and known anticipated risk abatement…a consensus when our solutions were mainstream and not peripheral. It begins now!
Other than that I have no opinion on the subject.
