John Hancock Increases Long Term Care Rates by 90%

[VolAgent]

As for the agency vs brokerage argument, NY based career shops typically pay 50 - 55% FYC on life products vs 100% for brokered plans through non-career shops.

Having been at a mutual, and then seeing how brokerage deals with comp, I would say this is spot on. It is the same pool of money, it is just how it gets split up. Career shops are all about the bonus to get close to brokerage comp, then you get retirement and benefits. The rest of the difference went in the GA and sales manager's pockets.

 

[scagnt83]

Back when I was a NYL agent, the LTCI "trainer" who went to different offices around the region used to harp on their actuarial assumptions. Way back then I thought "big deal", now it makes more sense.

He claimed that they used a much smaller lapse ratio than most other insurers, and this was the main reason they were priced higher. Im starting to believe him.

 

[VolAgent]

Back when I was a NYL agent, the LTCI "trainer" who went to different offices around the region used to harp on their actuarial assumptions. Way back then I thought "big deal", now it makes more sense.

He claimed that they used a much smaller lapse ratio than most other insurers, and this was the main reason they were priced higher. Im starting to believe him.

I remember the Mass wholesaler using similar lines. Low lapse and high use assumption.

 

[Chuckles21]

I'm not sure that it's my crystal ball projecting future rate increases for NYL & NWL, I think it's just a review of history. If every actuary on the planet miscalculated rates, why should we think that the ones working for NWM & NYL were so much smarter?

I am not bashing one or the other but you obviously don't understand the different approach a mutual has vs. a stock company. A stock company is around to provide a good product but it HAS to provide a profit for its' shareholders. That is literally its' sole function for even being around. A mutual is around not for profit per se, yes i know they need to profit, but they are truly around for the benefit of the policyholders.

Given that, stock companies need to show #'s/sales every quarter and if they underperform, God help them. This creates an atmosphere where they need to price products to get results in the here and now.

Where as a mutual does not play by the same rules. They don't have to show quarterly #'s, they need to be good stewards of the policyholders not just this quarter but as long as they are around.

It has nothing to do with smartness, it DOES have everything to do about approach.

Every company looked at the same statistics (as in NONE) in order to set premiums. Do you mean to say that everyone got it wrong with the exception of NWM & NYL?

As far as I know there has never been an insurance product to date that has been introduced before the market for it was around. Correct me if I am wrong but they did not sell car insurance before vehicles were invented and they sure as hell didn't invent LTCi before the need for care was around. So to say that there was no data is completely irresponsible.

The other thing I will say is NWM didn't get into the business until a lot later than most carriers. Just my opinion, but perhaps they waited until the water had cleared a little to get a better view of things.

Granted, the mutuals set their rates substantially higher than everyone else, and maybe that bought them some more time. But if interest rates are low for every LTC carrier, are they any higher for NWM & NYL? If people are going on claim for a longer period of time with more costly care for every LTC carrier, why is that not the case with NWM & NYL?

Of course the rate environment is the same for each carrier. What you fail to consider is the assumptive rate/rate of return each carrier has in their pricing structure. Second you also fail to acknowledge the difference in underwriting/claims experience. For the most part from my experience NWM is a lot more conservative in who they insure. This translates into hopefully fewer claims and hopefully shorter claims.

You say that "the mutuals have a better track record of keeping their promises". I'm not sure that ANY company promised never to raise rates on existing policyholders.

I know I never promise that

For 30 years, every LTC company "kept their promises" by not raising rates. Raising premiums on existing policyholders didn't start until 10 years ago and LTCi has been around since the late 70s.

Again your argument is moot considering the companies you have mentioned and then the time frame mentioned above. NWM has not been offering LTC for anywhere near 30 years.

 

[2insureyou]

I am not bashing one or the other but you obviously don't understand the different approach a mutual has vs. a stock company. A stock company is around to provide a good product but it HAS to provide a profit for its' shareholders. That is literally its' sole function for even being around. A mutual is around not for profit per se, yes i know they need to profit, but they are truly around for the benefit of the policyholders.

Given that, stock companies need to show #'s/sales every quarter and if they underperform, God help them. This creates an atmosphere where they need to price products to get results in the here and now.

Where as a mutual does not play by the same rules. They don't have to show quarterly #'s, they need to be good stewards of the policyholders not just this quarter but as long as they are around.

It has nothing to do with smartness, it DOES have everything to do about approach.



As far as I know there has never been an insurance product to date that has been introduced before the market for it was around. Correct me if I am wrong but they did not sell car insurance before vehicles were invented and they sure as hell didn't invent LTCi before the need for care was around. So to say that there was no data is completely irresponsible.

The other thing I will say is NWM didn't get into the business until a lot later than most carriers. Just my opinion, but perhaps they waited until the water had cleared a little to get a better view of things.



Of course the rate environment is the same for each carrier. What you fail to consider is the assumptive rate/rate of return each carrier has in their pricing structure. Second you also fail to acknowledge the difference in underwriting/claims experience. For the most part from my experience NWM is a lot more conservative in who they insure. This translates into hopefully fewer claims and hopefully shorter claims.



I know I never promise that



Again your argument is moot considering the companies you have mentioned and then the time frame mentioned above. NWM has not been offering LTC for anywhere near 30 years.

Again, what he said...

Maybe it's because I drink the same kool-aid, but he took the words out of my mouth on every point, including the not promising to never see a rate increase. I always make sure clients know it can happen, but I also compare track records of companies. Facts are facts... the big 3 mutuals (NML, NYL, and Mass) have not had in-force rate increases. Any other major (and I mean major as in top 10 seller) has had inforce increases or dropped out of the market, or both.

Chuckles is spot on on every other point as well. It's just a different world with mutuals. Simple.