US stand-alone long-term care market contracts slightly in 2022

The number of people covered by stand-alone long-term care policies shrank slightly in 2022 when compared to the prior year, according to a review of regulatory statements.

As a whole, US insurers provided coverage to almost 6.17 million policyholders through either an individual or under a group policy at the end of 2022. Almost two-thirds of policyholders are covered by individual policies. The 2022 total is about 148,000 fewer lives covered than at the end of 2021.

The total number of people covered by the industry is shrinking as consumers are not purchasing new policies in sufficient enough quantity to replace the ones that have been terminated during the year. In aggregate, the industry only added 46,420 new lives under individual policies in 2022, compared to 153,687 in the prior year and 57,201 in 2020. The large jump in new policyholders during 2021 was due to a Washington state government-mandated program.

Individual long-term care results

Among the 10 insurers with the largest direct blocks of individual long-term care (LTC) policies, four reported an increase in numbers in 2022 compared to the previous year. Mutual of Omaha Insurance Co. experienced the largest growth during the most recent year with the insurer reporting 224,507 covered lives compared to 221,268 at the end of 2021.

New York Life Insurance Co., The Northwestern Mutual Life Insurance Co. and Manulife Financial Corp.'s John Hancock were the other insurers among the group that reported higher year-over-year numbers. John Hancock exited the individual LTC market in 2016 but reported a small year-over-year increase in the number of direct lives covered. This increase was from policies John Hancock previously reinsured from Time Insurance Co. — the business was reclassified as involving direct policies before the cedant's September 2022 liquidation.

John Hancock remained the second-largest direct underwriter of individual LTC in 2022, with 12.2% of the market. The insurer reported $2 billion of direct incurred claims in 2022 with only $1.32 billion of premiums earned, pushing its incurred loss ratio to 152.1%, a deterioration of about 28 percentage points from the prior year.

Genworth Financial Inc. is the largest underwriter of individual LTC, with 920,405 lives covered at year-end 2022, a decrease of 30,102 from year-end 2021. The insurer reported a direct incurred loss ratio of 128.6% in the most recent year and $3.14 billion of incurred claims on $2.44 billion in premiums.

Overall, the industry reported an incurred loss ratio of 136.5% in 2022 compared to 122.8% in the prior year.

– Download the 2022 and 2021 Long-Term Care Experience Reporting Form 1 exhibit. – Read about the US accident and health insurance industry.

Group LTC performs better than individual LTC

The industry reported approximately 2 million lives covered under group LTC products in 2022, with six companies insuring about 93% of the market. Overall, the group industry still collected more premiums than it reported in incurred claims, which translated to a loss ratio of 87.1% in 2022 versus a ratio of 78.4% in the previous year.

Unum Group accounts for 40% of the group market and recorded $423.7 million of earned premiums during the most recent year. The insurer's incurred loss ratio worsened by 5.6 percentage points in 2022 to 54.3%.

John Hancock is also the second-largest direct underwriter of group LTC. Its group LTC block performed considerably better than its individual business in 2022. The insurer's direct incurred loss ratio on its group LTC business was 79.5% in 2022.