Exiting the Market: Understanding the Factors behind Carriers' Decision to Leave the Long-Term Care Insurance Market. A. Published Information Sources


We rely on data and information from America's Health Insurance Plans (AHIP), the Life Insurance Marketing and Research Association (LIMRA), industry analyst reports from Moody's and Standard & Poors, the academic research literature, and the National Association of Insurance Commissioners (NAIC) Long-Term Care Experience Reports for 2000, 2009, 2010 and 2011.7, 8, 9, 10, 11 Reports from this latter source present the most accurate information on key market parameters regarding premiums, claims, growth of in-force business, as well as historical performance indicators like actual-to-expected claims experience and data that enables calculation of measures of volatility in performance. Almost all companies are required to file detailed data on an annual basis with the NAIC, and such data is compiled and published in these annual reports.

These reports typically provide country-wide experience for companies. While the forms are relatively consistent, there have been a number of changes in 2010. The reports now provide additional information related to lapsation of policies but there is no longer detailed durational loss-ratio information provided in these reports. Thus, after 2009, one can no longer track the year-by-year loss-ratio (incurred claims divided by earned premiums) for a specific policy, based on how long that policy has been in-force. Nevertheless, the data in these reports is extremely valuable and allows us to "size the market" for companies still selling policies and for companies who exited the market.

An important caveat is that one of the large carriers to exit the market, Penn Treaty Network America, is currently in rehabilitation status under the auspice of the State of Pennsylvania. For this reason, the company was not required to provide data to the NAIC in 2009 and 2010. We solicited such information directly from the company and this allowed us to include their data with the aggregate NAIC reports.

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