Northwestern Mutual tops in LTCI policies sold in 2015; Overall sales see near 20% decline

LOS ANGELES – Northwestern Mutual sold the most long-term care policies in 2015, according to research from the American Association for Long-Term Care Insurance (AALTCI), topping Mutual of Omaha and Genworth Financial in the association’s ranking of the top 10 (see full list below).

The research also showed that while overall LTCI sales declined by about 20% last year, six insurers reported growth of as much as 62% in the number of policies sold in 2015 compared to 2014, although AALTCI does not release specific data about which companies achieved the most growth.

“This is a positive sign as is the fact that one new insurer will begin selling policies in 2016,” said Jesse Slome, director of the AALTCI. He recently shared an industry outlook with the organization’s members. One report has stated that National Guardian Life plans to enter the LTCI business with a new policy in the first half of 2016.

According to Slome, overall sales of traditional long-term care insurance continued to decline compared to the prior year. “The number of new policies (lives) sold in 2015 was down around 20%,” Slome said.

“The numbers don’t surprise me. Consumers we speak with perceive long-term care insurance protection is expensive, that insurers seek continual rate increases and they express concern after reading online reports about denied claims,” Slome said. “Consumers are wrong, but perceptions can easily become the new reality.”

AALTCI recently reported that LTC insurance companies paid $8.15 billion in claim benefits in 2015, a 4% increase over the prior year.

The national long-term care insurance expert noted that while sales of traditional long-term care insurance were declining, sales of linked benefit products were experiencing robust growth. “I believe the number of people buying these policies is far greater than any of the reports you read,” Slome added. “No one is really doing an accurate analysis of policy sales and senior-level executives have acknowledged that as many as 30% to 40% of all life insurance policies they sell now include some form of long-term care benefit. People are being protected and that’s what matters most to me.”

2015’s Top 10 Long-Term Care Insurance Companies (ranked by number of policies sold)

1. Northwestern Mutual

2. Mutual of Omaha

3. Genworth Financial

4. Transamerica Long Term Care

5. John Hancock

6. New York Life

7. Bankers Life and Casualty

8. Massachusetts Mutual

9. Thrivent Financial

10. LifeSecure Insurance Company

5 LTCI trends for 2016

Slome, now in his 18th year as head of the trade group, in December listed the following five major changes or trends he predicts for 2016:

1. Sales will increase. “Overall, more Americans will purchase some form of long-term care insurance protection in 2016 than have done so in recent years,” Slome said.

2. Most will opt for linked-benefit products. Slome expects sales of linked-benefit products including life insurance policies that offer some form of long-term care or critical illness payout benefit will eclipse traditional LTC insurance sales. “The companies are putting their energy and resources behind these products so the trend away from traditional LTC insurance is inevitable,” he said.

3. Distribution will change. Sales of traditional long-term care insurance policies by specialists will grow while fewer incidental insurance brokers will offer LTC insurance to their clients. “There has been little or no development of new agents to replace the many older agents who retire each year, and consumers are becoming increasingly savvy about the benefit of working with a knowledgeable specialist,” Slome explains.

4. Short-term care product sales will grow. Slome predicts sales of short-term care insurance products will be seen as affordable and viable options for consumers and will increasingly be marketed by agents who sell to seniors.

5. Rising interest rates will result in “calm.” After several years of what Slome categorizes as stressful industry years, rising interest rates will be good for insurers still committed to the long-term care insurance marketplace. “When insurers are positive, the good sentiment will filter down and overall, this sense of calm will be good for the entire industry,” he said.