From the very beginning, long-term care insurance carriers have struggled to find the balance between acceptable risk to take on and premiums to charge for their products. Today we have more information which to base future assumptions on as we have the ability to evaluate over 70 times the amount of data that we were able to in 2000. This means insurance companies have a better understanding on what triggers claims, the likelihood someone will lapse a policy and a better overall understanding of the risk the company is exposed to when they offer their insurance products.
This has been reflected in rate stability and means there is a much smaller chance that a client will face a price increase on a long-term care policy they purchase today. On policies taken out in 2000, there was about a 40% chance of a future rate increase. Today, that number has dropped to about 10%. And remember, there are still four companies that have never had a rate increase on existing companies.
There were a lot of factors that lead to companies putting policies in force that they later had to raise the premiums on. However, the number of companies offering long-term care insurance has dropped from a peak of over a hundred in 2002, to less than 15 companies today. And with more data and better information, the policies offered today, come with more rate stability and we should see a dramatic decrease in premium increases.