One of the main challenges today for reinsurers and direct writers is mapping their accepted long-term care insurance applications into optimally appropriate underwriting risk classes. Underwriting manuals provide not just procedures and assumptions, but also an instructive view into how direct long-term care (LTC writers) look at risk.
Over the past five years, RGA has provided quotes on more than 50 different LTC insurance policy forms, the vast majority of which were for new business. With LTC now a viable business line for more than 25 years, we recently undertook a comparative review of underwriting manuals to assess how direct insurers today assess and underwrite LTC risk.
What we found was that LTC underwriting has become remarkably uniform in some respects, and in others a significant range of opinions exist. The number of underwriting risk classes each direct writer uses may contribute to the range of opinions. For context, about 35 percent of our sample used three asset classes, about 35 percent used four or more, and the remaining insurers used only two. This article discusses the results in greater detail.