Time Is Wasting Away

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Indications are the Genworth will have product available for purchase within 60 days.  What is still unclear is:  Will Genworth have a CA Partnership policy for sell?  My guess (and hope) is they will.  However there needs to be progress in amending the Partnership regulations.

Since the CA Partnership is to attract and maintain LTC insurance  carriers they need to offer a product that is competitive.  Improvements to the Partnership is as simple as:

1. Allowing 3% compound inflation and other types of automatic inflation protection.
2. Having preciosity with other Partnership States.  (Asset Protection & Estate Recovery Credit)
3. Reducing the Minimum requirement for daily benefit from 70% of average cost of Nursing Home Care to 50%.

This, along with CA enforcing SB 483 to reduce Medi Cal planning and bring the state into compliance with Deficit Reduction Act of 2005. Then Genworth and other companies would consider redirecting their marketing efforts to Ca Partnership LTCi.

Desperately needed is leadership and cooperation between the DOI and Dept of Health.  Their mandate is to regulate Long Term Care insurance and make it a viable alternative to Medi Cal Planning.  LTCi should be affordable to the public.  Time is wasting away... the public is getting older and losing their ability to buy protection because of health concerns.

Certain is the fact that our dollars will buy less coverage.  This can be partly compensated by product design.  Tax Credits, above the line tax deductions permitting LTCi in group Cafeteria plans are other ideas CA can legislate in promoting  Long-Term Care Planning.

Genworth Suspention of LTC Sales Is Temperary

                                                                     

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Genworth has been selling the Choice Partnership LTC in CA since 1994.  They are scheduled to introduce the Privileged Choice Flex (PCF) in 31 one states on April 15th. California regulators have not yet approved Genworths new product.  In order to halt a prolonged "fire sale" Genworth announced (March 7th) they will temporarily suspend individual policy sales (March 21) in CA until the approval of Privileged Choice Flex.

I anticipate  the PCF to be an un-bundled LTC product at a perhaps 30% or higher premium.  This is do to: 1. Lower than anticipated Lapse Rate (from 6% to about 1%) 2. Low interest earnings on invested assets. 3. Overly optimistic underwriting assumptions.

Genworth has already let us know that they are moving towards: 1. Ending Preferred ratings (10 to 20% savings) 2. Reducing spousal discounts (from 40 to 20%) 3. Eliminating the sale of Lifetime benefits. 4. Moving from unisex to sex distinct  rates. This means men's premium will go down and women's premiums will increase.

Genworth remains the largest underwriter of LTCi in the US.  As noted by LifeHealthPRO - Feb 6, 2013 : Genworth reported a  $8 million net income in the last quarter.  Their gross benefit ratio increased to 126.4 % from 114.1%.  Loss ratio increased to 76.2 % from 67.1% (The have the reserves to pay future claims)

This is what I wrote March 5 Th  on the CA Partnership LinkedIn regarding the Genworth CA Partnership

"...  Remember the positives:

1. Protection from unreasonable rate increases. 

     ( a. DoI & DHCS can't approve any rate increases greater that 40% over a three  

          year period. (requires two separate actuarial audits) 

      b. Total approved rate increases must be spread equally over three-years.

      c. All Partnerhip policies must be kept in a unique risk pool.

      d. requires 85% loss ratio on premium increases) (AB 999)

2. Independent Care Management

3. Asset protection from Medi-Cal and Estate Recovery credit.

4. Monthly reimbursement for Home and Community Care.

5. Protection from unintended Lapses.

6.  Pre-Health Underwriting."

Talking about the evolution of the CA Partnership

"...  Regulations need to be reviewed and modified.  #1 being modification of the required 5% Compound inflation. (Good for 1994-not for 2013).  #2. SB 483 (2008) regulations need to be implemented.  #3. More Insurance Companies need to admitted to the Partnership. (Note: Any positive changes in CPR regulations must be offered to existing policy holders)

The California's DUI and DHCS have been extremely slow in approving Genworth's Privileged Choice Flex.  Other insurance  companies have also complained about the delays in the approval period.   It seems until the State streamlines the system and puts more manpower on problem we will continue to go from crises to crises as companies struggle to provide meaningful long-term care protection.