New Milliman survey reveals significant repricing of long-term care hybrid products in the last 12 months

Milliman today released the results of a new survey examining changes to hybrid long-term care (LTC) plans in light of the low interest rate environment and COVID-19. The study, “LTC Hybrid Product Survey,” is based on a survey of top writers of life LTC hybrid plans. The report focuses on current topics relative to the National Association of Insurance Commissioners (NAIC) Valuation Manual, Chapter 20 (VM-20), pricing, sales, and investment returns.

Key findings of the survey include:

  • When asked about the assumed morbidity margin for a hybrid product under VM-20, 29% of participants assume a margin less than or equal to 10%, 57% assume a margin ranging from 10% to 20%, and the remaining 14% assume a margin of 20% or more.
  • The top two primary challenges in modeling LTC hybrid riders under VM-20 are integrating rider cash flows with the base contract and determining the appropriate level and direction of margins for each risk factor under VM-20.
  • Hybrid products were repriced once in the last 12 months by 44% of survey participants, repriced two times by 11% of participants, three times or more by 22% of participants, and not at all by the remaining 23% of participants.
  • The single most important factor driving repricing by survey participants is the low interest rate environment.
  • As a result of COVID-19 or other factors, the majority of survey participants have changed issue age limits on hybrid LTC plans.
  • All participants reported they are finding it difficult to meet profit goals given the low interest rate environment.

A brief summary of the survey results is available by visiting the Milliman website here.