The National Association of Insurance Commissioners (NAIC) is continuing to ensure that past long-term care (LTC) insurance losses are not recouped through rate increases. Some regulators have asked LTC companies to justify premium rate increases in part by assuming that the proposed rate increase had been in place from the beginning. However, an NAIC task force ultimately decided that this reasoning added pricing risk by not allowing companies to seek the appropriate premiums levels needed to maintain the future financial health of LTC policies. In his article “Recouping past LTC losses,” Milliman consultant Robert Eaton provides examples illustrating how this pricing risk may influence claims losses in future years. He also offers perspective on the NAIC’s LTC Model Regulation update.
The long-term care insurance industry continues to look for ways to manage disparities between premiums and costs. Premium increases and benefit reductions are likely to remain major factors in business decision-making. Insurers must carefully consider the impact of rate changes on their bottom line—not just in terms of raw numbers, but in how they relate to experience and the potential for future profits or losses across the spectrum of benefits. Milliman actuaries Mike Bergerson and John Hebig provide some perspective in this article.
This article was originally published in the April 2017 issue of Long-Term Care News.
Alzheimer’s disease is the most common form of dementia and represents one of the largest long-term care (LTC) insurance risks. What though if Alzheimer’s disease were curable? How would it reshape the LTC industry? Milliman’s Jeff Anderson and Thrivent Financial’s Matt Winegar look at these questions in their article “After Alzheimer’s: What happens to long-term care insurance after a cure?”
This article by Milliman actuaries is the fourth in a series on long-term care (LTC) first principles modeling. The first article in the series, released in March 2016, introduced the topic and set the stage for the series of case study discussions that would follow. The second and third articles in the series, released in June 2016 and November 2016, examined the development of mortality and lapse assumptions, respectively, for use in an LTC first principles model. The latest article builds on these discussions with a look into how a first principles model, using these assumptions, can enhance and simplify the modeling of LTC projections. Once the groundwork of developing the key assumptions is completed, first principles models provide an improved platform for modeling by automating many processes and making refinements both easier to implement and more varied.
In this article, Milliman consultants discuss issues related to developing healthy life lapse rates using a long-term care (LTC) first principles model. As noted throughout the article, the common assumption that the ultimate total life lapse rate reaches a constant level produces an increasing healthy life lapse rate by duration. Alternatively, if the healthy life lapse rate remains constant once it reaches an ultimate level, that would imply that the total life lapse rate continues to decrease over time. The article also examines how mortality and lapse assumptions interact and the importance that developing an appropriate mortality assumption can have on setting lapse rate assumptions.
The development of separate mortality assumptions for healthy and disabled lives creates challenges for insurers using a long-term care (LTC) first principles model. In this article, Milliman actuaries discuss those challenges as well as their experience working with companies to overcome them. They also explore the advantages and opportunities of an enhanced approach to modeling mortality in a first principles context.