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Life Health > Long-Term Care Planning

Long-Term Care Insurance Sales Rise at Some Carriers: A.M. Best

By Allison Bell

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Analysts at A.M. Best have found some signs of warmth in the U.S. long-term care insurance market.

The number of new lives insured at nine insurers increased to 107,676 in 2022, up 11% from the number of new lives the companies added in 2020, according to a firm review of the insurers’ financial statements.

The number of new lives increased by more than 10% between 2020 and 2022 at three insurers: New York Life, Thrivent Financial for Lutherans and National Guardian Life.

At National Guardian Life, which is known for starting a new line of stand-alone LTCI products at a time when bigger insurers were fleeing from the market, increased the number of new lives by 184%, to 1,675.

What It Means

New sales of long-term care insurance policies still happen.

The Background

The U.S. long-term care insurance market grew rapidly from the 1980s through the early 2000s, then iced over around 2005 as insurers faced a combination of new premium stability regulations and realized that they had been overly optimistic about how consumers would use their policies.

Many of the insurers still in the market have pushed through many rounds of premium increases in an effort to make the numbers work.

In 2021, the start of a new public LTCI program in Washington state skewed national LTCI sales data. Consumers could get out of paying a new Washington state payroll tax if they bought stand-alone LTCI coverage or a life insurance policy providing a minimum level of long-term care benefits. That drove the number of new lives covered in 2021 to 212,259.

Because of the Washington state effect, comparisons of the new 2022 numbers with the 2020 numbers provide a clearer picture of the current state of the LTCI market.

The Big Picture

Total U.S. LTCI claims increased to $13.1 billion in 2022, from $10.3 billion in 2020. Earned premiums fell to $11.5 billion, from $11.7 billion, over that same period.

But interest rates began to rise rapidly in 2022. A.M. Best analysts did not look at the effects of increased investment earnings on profitability.

In theory, the new, higher rates could eventually help LTCI issuers use their $130 billion in LTCI reserves to generate about $4 billion in extra investment revenue per year.

Credit: Adobe Stock

Allison Bell

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