The nation’s largest seller of long-term care insurance, Genworth Financial, is engages in an “intense, very broad, and deep review of all aspects of our long-term care insurance business,” President and CEO Tom Mclnerney told investors.
Sources within the industry say that the firm may withdraw from the market in the event it does not win regulatory approval for new rate hikes on roughly 650,000 older, existing policies.
In addition, the firm requires state to approve changes that would enable the company to sell policies that more strictly underwritten and that offer shorter benefit periods, lower daily benefits, and other changes.
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“We are prepared to take actions such as suspending sales in states and ending new sales through distribution channels where we cannot offer products within an acceptable risk-adjusted return,” the spokesman said.
A major downturn has created a struggle in the long-term care insurance business as the result of a combination of benefits that are higher than expected, and lower than anticipated returns on lower investments.
The weak investment incomes can mostly be attributed to an extended period of historically low interest rates. Long-term care insurance companies earn a major portion of their revenues from their investments of premium income, predominantly in high-grade bonds.
Christopher J. Berry is an elder law lawyer in Michigan Dedicated to helping seniors, veterans and their families navigate the long-term care maze. To learn more visit http://www.theeldercarefirm.com/ or call 248.481.4000