Among insurers participating in a LIMRA International survey of the long-term care insurance (LTC) market, Sun Life Financial, with its Clarica network of captive LTC insurance specialists, dominated with 80% market share of new sales in 2005 and one-year sales premium growth of 31%, said Susan Jantzi, media relations manager for Sun Life. Meanwhile, some other players continue to struggle with LTC sales.
Unity Life, for one, announced in early July that it has pulled its product, Ten Star Long Term Care Insurance Plan, from the market due to disappointing sales.
When asked to explain the decision, Tony Poole, president of Unity Life, said, “We evaluated the volume of business. The difficulty was the product awareness and the distribution.”
While he considers LTC insurance “still relevant,” he believes the market is five years away from maturing. He adds that he does not rule out returning to this market when the product is more in demand.
While Ms. Jantzi shared Sun Life’s results from the LIMRA survey with The Insurance Journal, we do not have the company specific results for all companies surveyed. Instead, LIMRA International provided a version of the report that shows overall figures for the LTC market in Canada. This report reveals that annual premium sales were up 18% in 2005 for the market. This compares to moderate growth in 2003 and a sales decline in 2004 last year.
Total new LTC premiums reached $12.4 million in 2005, the report stated. Premiums in force, LIMRA noted increased by 22% from 2004 to 2005, to reach $55.3 million.
The LIMRA report analyzes only five out of eight companies that offer the product. RBC Insurance, Sun Life Financial, Manulife Financial, Unity Life and the Knights of Columbus were also surveyed. Notably absent are La Capitale, Desjardins Financial Security, and ACE/INA's new product.
While LIMRA’s study showed an increase in overall sales in 2005, half of the companies surveyed experienced a downturn in new premium sales.
Much of the growth that did take place in this market was obviously due to Sun Life’s efforts. Ms. Jantzi says that Sun Life’s in force premiums were up 33% in 2005, while the company’s in force market share of LTC business is 70% among the companies surveyed by LIMRA.
The LIMRA report points out that 47,000 Canadians are now covered by long-term care insurance. In 2005, over 9000 policies were sold. The product has been available in Canada since the late ‘90s.
The report shows that Individual LTC sales in Canada are presently cornered by captive agents. Independent advisors garnered just 12% of LTC sales in 2005.
The LIMRA study reports that over 70% of policies sold last year cover people aged 40 to 64. Women purchased 54% of new LTC products. The average age of all insured is 52.
Several insurers think the product would sell better if advisors knew a lot more about it. That is why heightened training in LTC is high on the list of insurers’ priorities for this year.
Karen Henderson, a conference speaker and expert in long-term care who has created two websites on the subject (howtocare.com and ltcnewsandviews.com), urges the industry to show more creativity in offering the product. Advisors need more knowledge and more support from the insurance companies, she contends.
Ms. Henderson also thinks that insurers should promote the product more to the public. She has seen only one company, RBC Insurance, advertise it in newspapers.
Some insurance companies have invested in internal training, even continuing education. Sun Life Financial acquired a network of captive agents through Clarica. “In long-term care, advisors receive training in LTC as soon as they are hired, followed by continuing education,” says Richard Chiasson, regional director, long-term care insurance, Eastern Canada.
Sun Life’s product is offered by long-term care specialists, many of whom hail from the health care sector. Clients referred by an advisor meet the specialists, who pinpoint their needs.
Advisors qualified to distribute the Sun Life LTC products include those in the Clarica network, advisors in Investors Group, since March 2001, and some managing general agents who have recently begun distributing the product in the independent network.
At DSF, the two LTC products launched last year are distributed by two different networks. The Laurentian Financial Services advisor network distributes the Independent Living product, and the DSF caisses network also offer a product. The head of health products at DFS, Nathalie Tremblay, says that the small number of advisors who are selling the product are doing extremely well with it.
John Parker, assistant vice-president, marketing and development of living benefits at Manulife, perceives a growing interest in the product among advisors. They see the demographics, he noted.
“We’re starting to get into the tip of the iceberg and we are at the early stages of a lot of growth,” he says.
Mr. Parker says Manulife plans to deploy considerable efforts in the coming months to develop and market the company’s LTCproduct.