By Jodi Anatole
I first entered the long term care insurance industry more than 25 years ago. At the time, the industry was in its infancy. My first experience was with Continuing Care Retirement Communities (CCRC). I was designing long term care insurance (LTCi) products that covered the incremental cost when a resident moved from independent living to a higher level of care.
I have always been involved with product design and have seen the industry go full circle from simple products to complex products and back to simpler products. Several factors drove the complexity of products—primarily marketplace pressures for growth and regulations at both the federal and state levels. Unfortunately, LTCi was and continues to be considered a senior product that is believed to need significant consumer protection provisions. While many of these provisions do protect consumers, they also make the product more complicated—making it more difficult to attract producers and more difficult to sell to consumers. As products became more complex, only specialists could sell them. This is certainly not a recipe for growth. Furthermore, while our industry had other products to draw experience from, no one believed that fraud would become as prevalent with LTCi products as the industry is beginning to experience now.
While we can’t turn the clock back and redo the last 25 years, we can learn from the past and influence the future. Make no mistake, long term care coverage is still greatly needed. The question is what carriers, especially those with closed blocks, should do about the coverage that is in-force today and what they can do going forward to offer coverage to the large number of people who are not insured and who need this protection.
To understand how carriers can address these challenges, it’s important to first examine the resources needed to manage closed blocks. As claims increase, many carriers don’t have the infrastructure, technology and people needed to manage LTCi policies. Today about 55 percent of the LTCi policies are in closed blocks and claims are growing at 10 percent per year. Yet many carriers have competing internal priorities. For those carriers, outsourcing is often the right option.
At the same time, LTCi claims need to be actively managed. During the sales process, there is great emphasis placed on care management, which is an integral part of the product. Experienced staff members are needed to work with claimants, understand policy language and track the provider delivery system, which continues to evolve. While it was not anticipated, we are seeing that claim recovery is possible. As a result, carriers need to ensure they have appropriate resources to manage claims either internally or by utilizing an experienced partner. Companies such as LTCG are already providing these outsourcing and claims management services.
Carriers also need to think differently about product design. There was a time when standalone LTCi was believed to be the only option for protecting long term care risk. More recently we have seen the rise of hybrid products such as life products with LTC protection. However, this is where we need to learn from the past. There are now options, such as life/LTC and Life /Chronic Care products. While the products differ slightly, both provide meaningful protection. The Life/Chronic Care product is governed by a simpler regulatory framework than the Life/LTC product – it is an easier product for producers to sell. The Life/LTC product more closely mirrors LTC protection, with the same benefit eligibility criteria and many of the same regulatory requirements as standalone LTCi.
Finally, the LTCi industry needs to continue to evolve. It needs to attract new advocates for the products. A generation of experts is retiring and new thinking is needed. We need to drive product innovations and continue to work with the public sector to develop solutions. In the meantime, we can’t forget about the 7 million people who already purchased products. They are counting on us to be there when they need the protection… and as our learnings from the past have already told us, most of them will.
Jodi Anatole is an independent consultant that recently retired from MetLife where she was Vice President with responsibility for MetLife’s Long Term Care business and product development and management for MetLife’s Accident and Health Business. She has 25 years’ experience in the long term care insurance industry with responsibility for individual, employer and association long term care insurance products. Jodi has also served as a key spokesperson for MetLife and been active in legislative and regulatory issues. Previously, Jodi spent over five years with New York Life Insurance Company in development of networks and direct marketing of insurance policies. Jodi holds a BA in economics from Tufts University and a MBA in marketing from New York University.