Although the market has experienced a very major contraction in the number of companies actively selling policies, it is worth noting that the LTC insurance market covers more than seven million Americans and is larger than the individual disability market. Significant reserves have been established to pay for future LTC costs and the increasing flow of private insurance dollars to LTC providers is growing in importance. As essential, there is a core of major insurers highly committed to this market and under the right circumstances more carriers could be drawn back into the market.
While many early market entrants learned the "hard way" about what is required to price and manage the risks in this product, there have been many valuable lessons learned. Such lessons can help set the industry on a more solid financial foundation and make entry for new carriers a more attractive proposition. Identifying strategies that produce a level of profitability attractive enough to draw capital into the market is a key to assuring that the growing demand for the product can be met by a robust and competitive market of insurers. Public policy and regulatory approaches designed to lower the cost of policies, allow greater product funding-flexibility, support new forms of combination-products, and encourage strategies that help to minimize risks outside of the control of companies, could provide needed support for a market "re-set".