Low interest rates and problems with actuarial forecasts are causing big problems for private long-term care insurance (LTCI) carriers today, but, in the long run, demographics will make growth in the LTCI market inevitable.
Andrew Melnyk, a researcher at the American Council of Life Insurers, made that argument Wednesday at a hearing on the LTCI market organized by the Senior Issues Task Force, an arm of the National Association of Insurance Commissioners (NAIC).
The task force convened the hearing at the NAIC's fall meeting in Washington.
State regulators have been looking at the market because of increases in rates for in-force and new coverage, and reports of carriers dropping out of the market.
Melnyk -- who emphasized that he spoke for himself, not the ACLI -- said he believes the aging of the U.S. population and younger consumers' growing familiarity with long-term care (LTC) risk are much stronger forces than whatever short-term problems are causing problems at LTCI divisions today.
Low rates hurt returns on insurers' investment portfolios, and many companies in the private sector, not just life insurers, face regulatory uncertainty, Melnyk said, according to a written copy of his presentation provided by the ACLI.
But there is also concern about public programs, such as Social Security and Medicaid, and the oldest baby boomers have already reached retirement age, Melnyk said.
"Despite fluctuations in the economy, demographic transition continues and will ultimately drive demand for retirement products, including LTC insurance," Melnyk said.
Aside from the fact that the population is aging, the boomers have fewer children than their parents did, and they know they will need to think beyond depending on their children to pay for LTC services, Melnyk said.
In addition, people are living longer, but there are signs that the future population of old old people might be less healthy than the current population of old old people, Melnyk said.
"Younger generations may be more aware of the need to plan for LTC needs and may be more risk averse," Melnyk said.