My sons grew up on a farm. They learned responsibility early. The land and the animals demanded constant responsible intimate care and service. That requirement fell squarely on those who created the obligation from the moment we stepped onto that ground. There is no finger pointing on a farm. If you have ever sold or facilitated the purchase of an insured chronic illness or long term care financial instrument you are directly and permanently responsible for the exercise of that leveraged risk obligation. Renewals and service are merely a friendly reminder of what is a permanent obligation. For the last twenty years we have lived in a rapidly shrinking universe of dwindling sales particularly for stand alone LTCI health policies.

In relation to new sales vs growing claims adjudication, we long ago became a negative growth industry.

Although no one wants to discuss or loudly admit it, we are in the midst of what may ultimately prove to be an extended and truly unpleasant rate spiral. All but a handful of carriers still have an open for new business sign on the front door. We are an industry of claim management. Closed blocks of premium dominate our activities including corporate priorities and expenditures. Cries in a wasteland of needed premium growth appear to be dominated by managed care strategies and a plethora of claim management vendors. We are paying claims. Last numbers I saw were in excess of 12 billion. Our sales may not ever have been what we would have preferred but it is absolutely true that we have placed on the books trillions of potential claims dollars now waiting for us just over the horizon. Our industry has no choice but to be focused on the rear-view mirror hoping the police never catch up and prove that we were speeding ahead to avoid the inevitable.

The strength and freedom of thought provided by this magazine now allow me to knock the hornets’ nest out of the tree and run. I would ask you to take a moment and review the case study complaints concerning LTCI claims readily available at your State Board of Insurance or the Better Business Bureau. In my humble opinion they are not dominated as might be expected by rate increase concerns. They are drowning in complaints about confusing policy terms and poor service. Shame on us. We should all be extremely proud of those agent advisors and brokerage centers providing advice and counseling to those already caught up in the struggle to get claims paid. Many are already actively responding to the cries for help to understand how a claim is adjudicated and ultimately paid. Simply providing a toll free number in response to the very point in time in which every financial and emotional risk we were intent on leveraging against is, in my humble opinion, morally and ethically insufficient. There is too much here to complete in one column therefore lets just begin with a few shots across the bow of an industry doing it’s best to respond to current realities:

  • Claims are already in the hands of a very limited number of seasoned claim adjudication administrators. Virtually all closed blocks of premium are not administering their own claims, they have been relocated to an experienced service vendor.
  • The majority of those blocks had some reinsurance in place. Structurally, claim growth ultimately would end up as their responsibility. It is fair and reasonable to believe they would take actions to insure that claims are paid only on a valid demand for payment.
  • There is a wide universe of benefits configurations that were sold. There is simply an endless opportunity to misunderstand, misconstrue, and misrepresent what the consumer thought was purchased or the agent thought was sold.
  • A standardized “Warning” of what to expect when you begin a claim journey is a good place to start. It is often a slow process. There is an abundance of required paperwork prerequisites. It is almost certainly going to involve a face-to-face evaluation by a certified and approved health care professional. Although live computer technologies are also growing. There will be a cognitive evaluation component to the interview.
  • Unfortunately, the devil will be in the details and fine print. Is it payment reimbursement, indemnity or cash? What are the definition nuances of the greatest major hurdle, the dreaded Elimination Period? How those days are totaled and then approved will be a major source of contention.
  • There will ultimately be a required Plan of Care. How that becomes established is critical. How will the ongoing proof that a claim is continuing be handled? How and under what circumstances will the carrier allow an assignment of benefits?

The American consumer remains exposed to the wear and tear of an extended need for custodial assistance. We created and continue to market a complicated insurance leveraging of that risk. The obligations we install with those policies will demand our attention with hands on and standby assistance. We cannot ignore the reality of an adversarial relationship between marketing and claim adjudication that may have always been inevitable. Paperwork is after all just paperwork. I’m sure attempts at fraudulent claim acceptance are also quite real. I am also absolutely certain that we are perhaps inadvertently complicit in building a consumer black eye that may be very slow in healing. We can be better prepared to help navigate choppy water. We can acknowledge that these claims are extremely time sensitive. The need for care is most often immediate and intense. Our involvement and assistance in helping to facilitate expedited claim justice is mandatory.

Other than that I have no opinion on the subject.

Ronald R. Hagelman, CLTC, CSA, LTCP, has been a teacher, cattle rancher, agent, brokerage general agent, corporate consultant and home office executive. As a consultant he has created numerous individual and group insurance products.

A nationally recognized motivational speaker, Hagelman has served on the LIMRA, Society of Actuaries, and ILTCI committees. He is past president of the American Association for Long Term Care Insurance and continues to work with LTCI company advisory boards. He remains a contributing “friend” of the SOA LTCI Section Council and the SOA Future of LTCI committee. Hagelman and his partner Barry J. Fisher are principles of Ice Floe Consulting, providing consulting services for Chronic Illness/LTC product development and brokerage distribution strategies.

Hagelman can be reached at Ice Floe Consulting, 156 N. Solms Rd., New Braunfels, TX 78132 Telephone: 830-620-4066. Email: