“It is certainly widely accepted that rate increases, particularly the big fat and somewhat unanticipated ones, are bad for all concerned. It should not however be a revelation be that individual health insurance is often subject to the variable and often violent wind storms created by medical inflation. Unfortunately, that universally accepted truth does not exactly hold water when viewing the history of rate increases in the world of stand-alone long term care insurance. Medical inflation has been consistent with expectations and was always a planned-for pricing consideration. The fact is that, this time, what did contribute to the creation of what I suspect looks more like an adverse selection rate spiral than anything seen before could simply not have been anticipated by those stakeholders involved in the creation and growth of this market.
Don’t misunderstand—the damage caused by this lack of omnipotent clairvoyance is very real and verges on the catastrophic. All too many have been running for the exit doors, including: reinsurers, companies, agents and most importantly consumers…” Click here for the full article, originally published in the September edition of Broker World Magazine.