Thursday, August 01, 2013

Genworth LTCi in the crosshairs

Genworth, one of the last remaining "players" in the Long Term Care insurance (LTCi) market, is about to drop the hammer on some of its long-time policyholders:

"We're conducting an intense, very broad and deep review of all aspects of our [long-term care] insurance business ... believe the company has to increase the price of products sold before 2002 to bring them closer to the break-even point"


Actually, this is far from unexpected, and arguably overdue: as we've seen over the years, the current long term pricing models just aren't sustainable. For one thing, too many folks have kept their policies (not a bad thing, per se, just that carriers count on a certain amount of attrition), so both claims and reserves continue to mount.

And, of course, as the LTCi business itself matures, it becomes more and more obvious that earlier plans were substantially under-priced. While that may have been a good deal for early adopters, over time it's a problem.

Which is not to say that the LTCi market is 'kaput;' indeed, more folks than ever seem to be taking a serious look at these plans. But it's important to keep in mind that, with few exceptions, rates will continue to climb for at least a while.
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