Insurance Renewal Premium Increases

What happened: Long-term care (LTC) insurance carriers have been aggressively increasing premiums since 2010, with a 70-year-old couple facing a 27% hike on their 12-year-old policy. This trend has led some policyholders, like the couple, to self-fund reserves or drop their policies altogether. A $7,000 per year LTC policy is now priced higher than average, further exacerbating affordability issues.

Market impact: The LTC insurance industry is facing a significant challenge, with higher premiums driving policyholders to seek alternatives or drop coverage entirely. This trend could lead to a decrease in new policy sales and increased policy lapses, negatively impacting insurers' top-line growth and profitability. Companies like Genworth Financial and Mutual of Omaha, prominent in the LTC insurance space, may be particularly affected.

What to watch next: In Q2 2023, monitor Genworth Financial's and Mutual of Omaha's earnings reports for any signs of increased policy lapses or decreased new sales due to higher premiums. Additionally, keep an eye on regulatory developments, as potential changes in LTC insurance regulations could influence the affordability and availability of these policies.