Maryland Law May Prohibit John Hancock Increase

[Crabcake Johnny]

"In September, the Massachusetts-based insurer began telling its distributors that it intended to seek 40% rate increases for its in-force long-term care insurance policies in all states and that it would suspend sales of group long-term care products while reviewing market conditions. The company cited unfavorable claims patterns for the moves, which were followed in November by MetLife’s decision to exit the long-term care insurance marketplace completely in 2011."

Md. rate cap may cut John Hancock

 

[CHUMPS FROM OXFORD]

I guess JH could be the next one to exit.

 

[bluemarlin08]

Very possible.

 

[Crabcake Johnny]

Maybe what we're going to end up with is that LTC is a failed insurance concept. Clients likely can't afford that rates LTC carriers actually have to charge to remain afloat.

The issue at hand is it's difficult to sell is to the younger set (50's) when the carriers get a chance to build up a lot of revenue before they have to pay claims. Clients interested in LTC are too close to actually needing it.

 

[Mr_Ed]

Maybe what we're going to end up with is that LTC is a failed insurance concept. Clients likely can't afford that rates LTC carriers actually have to charge to remain afloat.

The issue at hand is it's difficult to sell is to the younger set (50's) when the carriers get a chance to build up a lot of revenue before they have to pay claims. Clients interested in LTC are too close to actually needing it.

Do you actually think that these insurers are losing money on their LTCi policies?

 

[GreenSky]

Do you actually think that these insurers are losing money on their LTCi policies?

No, in fact they are only raising their prices 40% so that they won't write as much new business. They only make money when they stop adding healthy, young people to their books.

Rick

 

[Mr_Ed]

No, in fact they are only raising their prices 40% so that they won't write as much new business. They only make money when they stop adding healthy, young people to their books.

Rick

As the one who got my vote for Insurance Commissioner, I'm sure you know that LTCi is not a ponzi scheme.
they don't need new people to buy policies in order to pay claims.
they don't need new people to buy policies to make a profit.

 

[GreenSky]

I hope you're joking. If there are fewer people dying before benefits are paid or people live longer than expected and therefore file more claims, the company loses money.

They can delay the invevitable with new "blood," but the rates must be adjusted to stay in business.

Rick

 

[dgoldenz]

So they will just increase the rate by 15% for 3 years in a row...

 

[CHUMPS FROM OXFORD]

For an insurer to make money on this product, they depend on a specified number of customers to cancel their plans before receiving benefits. This number has been shockingly lower than they anticipated.