John Hancock Increases Long Term Care Rates by 90%

[Arthur Rudnick]

So who will be next? Hancock took cases others rejected, as did Penn Treaty, what do you think Mutual Of Omaha will be doing soon because they
are now the dumping ground for borderline cases.

There is no way you can compare Hancock's underwriting to Penn Treaty. Hancock was a little more liberal than other carriers on specific medical conditions, but every carrier has their "sweet spots". Penn-Treaty, like Conseco issued a policy to anyone that could breathe.

Also, keep in mind that Hancock was usually higher priced than other companies to cover the increased risk that they sometimes took. And, unlike Genworth, Hancock had 2 surcharges of +25% & + 50%.

I've always found Mutual of Omaha to be pretty conservative in their underwriting, also with 2 ratings above standard. And, with 2 separate morbidity conditions, they usually declined, where other carriers might make an offer.

 

[yankee466]

So who will be next? Hancock took cases others rejected, as did Penn Treaty, what do you think Mutual Of Omaha will be doing soon because they are now the dumping ground for borderline cases.

I do not find Omaha to be a dumping ground at all. True, they will take some things that others won't, but I have had declines with them that Genworth had no problem with.....so it really depends on the condition. I find Omaha UW to be more anal, and sometimes downright condescending when you talk to them on the phone, whereas at least GNW will take a more common sense approach and is always pleasant to speak with. NADM makes his living by figuring out which carrier is most lenient on a condition by condition basis....so everyone has their sweet spots.

I had two clients declined by everyone I deal with....and one got accepted by Bankers, and the other was accepted by NML. Shocked me no end, as of course I told them no one would touch them, and they proved me wrong. Maybe Bankers doesn't care....since they will never pay the claim, and NML doesn't either because they charge so much?

 

[lachjs789]

More proof that Linked Benefit products may be the future of LTC since carriers cannot seem to price properly for future morbidity.

 

[CALTCAgent]

More proof that Linked Benefit products may be the future of LTC since carriers cannot seem to price properly for future morbidity.

Just curious, what makes you think linked benefit products can do better?

 

[Chuckles21]

More proof that Linked Benefit products may be the future of LTC since carriers cannot seem to price properly for future morbidity.

You do understand that there are certain carriers, cough, out there who do seem to have it priced correctly. You know, the same carriers everyone bashes for their pricing.

 

[2insureyou]

You do understand that there are certain carriers, cough, out there who do seem to have it priced correctly. You know, the same carriers everyone bashes for their pricing.

Umm... yeah, what he said... cough... cough...
- - - - - - - - - - - - - - - - - -

I didn't forget them. You're right, I was wondering when that would be brought up.

There was a time when the words "rate increases on existing policyholders" never existed.

In a few years, I'm willing to bet we'll be saying the same thing about NML, MM, NYL and Guardian.

Oh wait, Chuckles... Arthur is predicting the future with his impeccable crystal ball... Arthur, on the contrary, if history is any indication at all, these mutuals will not do what you have implied.Guardian is out of the game, so that's how they have reined in their line of biz (which was written through a stock-owned subsidiary, anyway) MM raised through a repricing on NEW policyowners recently, and NML and NYL are hangin' tough.

What I WOULD expect to see as lifetime benefits go by the wayside with other carriers is for the mutuals to follow suit on that, due to adverse selection. If NML, for example, is the only game in town on lifetime benefits, that would increase adverse selection. It would not surprise me at all to see them stop offering that.

But then, I don't know that my crystal ball is any better than yours, but I do know that mutuals have a better track record of keeping their promises... just sayin'

 

[Arthur Rudnick]

Oh wait, Chuckles... Arthur is predicting the future with his impeccable crystal ball... Arthur, on the contrary, if history is any indication at all, these mutuals will not do what you have implied. Guardian is out of the game, so that's how they have reined in their line of biz (which was written through a
stock-owned subsidiary, anyway) MM raised through a repricing on NEW policyowners recently, and NML and NYL are hangin' tough.

What I WOULD expect to see as lifetime benefits go by the wayside with other carriers is for the mutuals to follow suit on that, due to adverse selection. If NML, for example, is the only game in town on lifetime benefits, that would increase adverse selection. It would not surprise me at all to see them stop offering
that.

But then, I don't know that my crystal ball is any better than
yours, but I do know that mutuals have a better track record of keeping their promises... just sayin'

I'm not sure that it's my crystal ball projecting future rate increases for NYL & NWL, I think it's just a review of history. If every actuary on the planet miscalculated rates, why should we think that the ones working for NWM & NYL were so much smarter?

Every company looked at the same statistics (as in NONE) in order to set premiums. Do you mean to say that everyone got it wrong with the exception of NWM & NYL?

Granted, the mutuals set their rates substantially higher than everyone else, and maybe that bought them some more time. But if interest rates are low for every LTC carrier, are they any higher for NWM & NYL? If people are going on claim for a longer period of time with more costly care for every LTC carrier, why is that not the case with NWM & NYL?

You say that "the mutuals have a better track record of keeping their promises". I'm not sure that ANY company promised never to raise rates on existing policyholders.

For 30 years, every LTC company "kept their promises" by not raising rates. Raising premiums on existing policyholders didn't start until 10 years ago and LTCi has been around since the late 70s.

For you to imply that Guardian left the market rather than raise their rates is pretty much of a stretch. If their LTC business was profitable, wouldn't they stilll be in the business?

 

[somarco]

You do understand that there are certain carriers, cough, out there who do seem to have it priced correctly. You know, the same carriers everyone bashes for their pricing.

Higher pricing alone does not make them right.

If you are above market it means you will most likely write less premium than more moderately priced plans.

Fewer insureds, lower premium base, potentially higher loss ratio's.

 

[Mr_Ed]

Higher pricing alone does not make them right.

If you are above market it means you will most likely write less premium than more moderately priced plans.

Fewer insureds, lower premium base, potentially higher loss ratio's.

The higher pricing is not because they are "reserving more" or "more conservative" in their assumptions. It is most likely attributable to the higher cost of distribution through a career agency system, as opposed to distributing products through independent agents. It's that simple.

mred

 

[somarco]

The higher pricing is not because they are "reserving more" or "more conservative" in their assumptions. It is most likely attributable to the higher cost of distribution through a career agency system, as opposed to distributing products through independent agents. It's that simple.

Maybe, maybe not.

Regardless of how the product is distributed, in a free market carriers with similar products but higher prices usually fail to gain significant market share.

Their losses are then spread over a smaller premium base leading to higher renewals once their block catches up with them.

As for the agency vs brokerage argument, NY based career shops typically pay 50 - 55% FYC on life products vs 100% for brokered plans through non-career shops.

I have no idea what commissions are on LTCi thru a career shop vs brokerage but I don't think the premium differential can be attributed solely to the method of distribution.