Last fall we experienced serious attrition at the provider level. The total effect of dramatic and substantial rate increases and carrier exits meant that approximately 25 percent of premium written in 2010 was thrown into jeopardy.
Most predictions were of a dire nature. The traditional gnashing of teeth and wringing of hands dominated conversations. Many of us answered too many calls asking if this was the end. To my knowledge no one predicted what has happened.
First we ended 2010 with the first serious increase in production in many years. New sales were up almost 14 percent (according to LIMRA) from the previous year, breaking the $500 million of new premium mark again. Plus the remaining committed LTCI professionals have experienced unprecedented first quarter growth in new sales—accounting for the $125 million that had to land somewhere.
What also needs to be mentioned is that growth in sales has been greater than just the relocation of existing production levels. First quarter 2011 sales were up another 11.6 percent!
Many of us have had to fall back and regroup: reviewing our clients’ options, learning about new products, examining our marketing priorities, and evaluating how to handle rate increases on both old and new premium. This increase in focus has created new premium—activity alone breeds production.
When many may have thought our world was collapsing, in reality it experienced a spring of rebirth, renewal and refreshed dedication. The theory being offered is basic organic chemistry and Newtonian physics: molecules in motion generate friction and heat.
Unrelenting rate increases brought on by accumulating claims experience and ongoing medical inflation are finally creating a new sense of urgency! Even the most obtuse can see there is a perfect storm forming just offshore caused by a product that experiences virtually no lapses except death and boomer demographics.
• The fastest growing segment of our population—those 85 and older—will increase by 40 percent by 2015.
• Caregiving is unavoidable. Boomers are increasingly involved in issues of dependency where family members are concerned.
• This year boomers begin to turn 65, and by 2030 the entire boomer population will be 65. Longevity issues can no longer be denied.
• LTC insurance claims continue to rise with our industry now paying $4 billion in claims per year.
• The demons of medical inflation cannot be ignored. Genworth’s latest cost of care survey indicates a 5.99 percent growth in the cost of long term care.
An agent called last week and began by saying he had heard me speak on more than one occasion and while he had not been active in LTC insurance sales for a number of years, he was re-evaluating this decision. Apparently he had sold a policy to his father-in-law a decade ago. His father-in-law, now 72, fell while working in his back yard, sustaining serious injuries to his shoulders and back. Because of the extensive rehabilitation necessary, his father-in-law was placed in a skilled care facility, and Medicare paid for the first 90 days of care. After that, his father-in-law’s LTC insurance began indemnity payments of $5,685 per month. He first thanked me and then asked what he could do to rededicate himself to LTC insurance sales.
Maybe, just maybe, what will finally revitalize sales is that there is simply no place left to hide. The cost of long term care and LTC insurance will continue to increase; the benefits which we are able to provide will continue to decrease; and for those with health issues, coverage will become harder and harder to find.
How difficult can it be to ask one simple question: Do you have your LTC insurance plan in place?
Get out your Bunsen burner, throw on your lab coat, and just mix the ingredients in order to provide the catalyst, which will ignite the reaction—molecules in motion will create their own heat.
Other than that I have no opinion on the subject.
