Economic uncertainty and associated low interest rates have been ascribed as chief reasons insurers are steadily backing out of LTC coverage; growing costs are also a factor.
“The decision to exit the individual long-term care business reflects the challenging economics of the individual market and our desire to focus our resources and capital on the group market, where we see the greatest opportunity," said Malcolm Cheung, VP, Long Term Care, Prudential Group Insurance, in a statement.
As reported in Insurance Networking News, the costs of long-term care have continued to climb, according to a study released last year by John Hancock Financial. According to the American Association of Long Term Care Insurance, more than 10 million Americans have purchased long-term care insurance to date.
The exodus has been continuous: Allianz Life decided to stop selling stand-alone LTC insurance products in November 2009, and in November 2010, MetLife reported it would stop selling individual LTC. Berkshire Life Insurance Company of America, unit of Guardian Life Insurance Company of America, followed in February 2011 with a similar announcement. As recently as last month, Unum Group announced it would halt new group LTC sales.
Prudential said it would stop accepting applications for policies sold to individuals as of March 30, but would honor the coverage sold through employer-sponsored benefit programs. In a statement, Prudential noted that as long as premiums are paid on time and benefits aren't depleted, coverage will remain in place. The company added that premiums for remaining policies could be changed subject to regulatory approval.
The top five individual LTC insurance carriers in 2011, based on in-force business, in alphabetical order, were Bankers Life And Casualty, Genworth Financial, John Hancock Financial, MetLife companies and Transamerica Long Term Care, according to LIMRA.
Pat Speer writes for Insurance Networking News.