Ct Consumer Complaint: MetLife “Longterm” Care Insurance

October 6, 2011
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From Thomas J. Annulli

My 88 year old mother has a longterm care insurance policy which would cover nursing home for 3 years with maximum benefit and a quality home.  She has had this policy for 15+ years.  Last week she received notice that her premium will be increased, for the first time ever, by 39% as MetLife needs to recoup costs associated with this product.

When I called MetLife  they actually had the nerve to say “we have gotten out of longterm care insurance because we lost too much money on it.”  Their solution offered is to either pay more – which would raise her premium from $3,500 per year to $4,965 per year, or get less monthly benefit (lower quality nursing home) or a shorter benefit period.  So, I asked them, what happens if my mother dies without using her policy, do they refund the $52,500 in premiums my mother already paid as she made a mistake thinking she would need the policy?  Of course, they said no.

I called the State of Connecticut Insurance Department and got a pleasant person who tried to be helpful and she said that the Insurance Department approved this as it was necessary to recover costs.

I questioned her from a business perspective – MetLife is the one who set the rate 15 years ago, and if as professional actuaries they guessed the cost wrong, they should swallow their lumps and raise the price on new policies – she told me that is illegal, that they must charge everyone the same – that makes no sense to me.  Isn’t the primary function of an insurance company to determine an amount of risk they have, and then spread that risk, based on their actuarial tables, among a pool of customers to make money?   Not much different that a bookie taking bets on a game?

This makes no sense to me, other than MetLife trying not to payout, and the Insurance Commissioner coddling the large company.

Thomas J. Annulli

Middlebury, CT

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6 Responses to Ct Consumer Complaint: MetLife “Longterm” Care Insurance

  1. Gregg Kroman on October 6, 2011 at 9:05 pm

    Mr. Annulli,

    I understand your frustration after being in the industry for 30 years and have been on 5 product developement teams there are a lot of factors that cause rate increases. This is not intended to make excuses. It is just what can be the causes for rates to go up. A. Investments effect reserves. If a carrier has heavy losses or interest rates on investments are substandard will cause rate increases and a possible lowering of a companies ratings. B. The company loss ratio exceeds 65% by miscalculated underwriting. C. Retention rates is a big one, if underestimated. The retention rates on LTCi is in the high 90’s almost 96.5%. Because policyholder do keep their policies, higher claims are inevitable. 15 years ago, most carriers anticipated 88-92% D. Modern medicine is very skillful at keeping people alive longer in a degenerative or chronic state. E. Large amount of policies that have a 5% compounded inflation option and/or unlimited benefits. These policies cause reserve issues. In the case of unlimited benefits, a carrier has to set a side $250,000 per claim and can not touch those funds no matter the length, even if the care lasts 12 months. Actuarial tables for mobidity on LTC are still in learning stages. The first policy was written in 1974, with all the above factors there is still allot to learn. Math is simply a tool, and at this point I would take the amount of premium I paid in and determine how many months of care if a claim is paid to recoup the premiums invested. With your Mom at 88, she has a high probability she will need assistance. It is never easy and if it does occur, you will be glad she has coverage. If she never has the experience that is a blessing. Insurance is to ward off potential risk no one has a crystal ball. We always hope we never have a fire, accident or death but if we do insurance can help rebuild or provide peace of mind. My Best Enclosed to you and your family.

    Gregg Kroman
    Executive Director
    CashLTC.org

  2. tom on October 7, 2011 at 11:52 am

    What the above poster did not reveal is that the majority of insurance companies selling LTC in the last 20 years or so were competing for market share and all had to price within a certain range in order for the brokerage community to sell their product. True LTC statistics are still being developed and they are not as mature as life insurance statistics for pricing purposes but profitability for the sitting CEO was probably one of the primary driving factors in product pricing not good actuarial practices. “Here is what we the actuarial department thinks.” As CEO I think this number will keep us in the game. It was/is a big game. There were 30-40 LTC companies 15 years ago, today there are approx. 8 and most of them have raised premiums more than once and not 3-5% but 18%, 30% and some as high as 80%. Pretty good pricxing, huh? LTC can be a 30 to 40 year promise by the insurance industry and how long does a CEO run a company……..short term profitability to Wall Street was probably more important then the promise to policyholders. There are a few, very few companies who support their promises with their LTC product and do not need to answer to Wall Street, Mutual Insurance companies. The baby boom gen quickly amassing and LTC it is an important piece of most peoples retirement risk plannning. So seek out one of the big mutuals.

  3. Gregg Kroman on October 7, 2011 at 1:30 pm

    I do appreciate Toms argument. In the beginning carriers were absolutely competing in rates and benefits. Some carriers went to far, to the point of if a client could fog a mirror they were issued coverage. Yes some, sold there blocks to a larger carrier believing they could be the biggest by buying its way to the top. The flawed philosopy if enough comes in the front door they would have enough left over to pay out the backdoor. That did not work. Those carriers went into receivership.

    Where our pathways shift is due to many carriers left the industry because its not a profitable business model. Most carriers have a huge up front cost in reserves and marketing. Profitability can take up to seven years if ever. This is why you are not seeing carriers entering most are and have exited. This is a very specialized product . The same could be said for disability insurance when it first entered the market. It took a long time to get get a handle on pricing and underwriting. The biggest curve ball that will continue to haunt carriers is what I stated before. “Modern Medicine” and the future care delivery system.

    There will be a few carriers who will have the staying power and data in the years ahead. Yes in some cases, mutual companies are a good chioce but they too have to be financially viable in the same manner as other insurance carriers. I suggest considering policies that do have rate guarantees, underwriting experience, paid up provissions and some form of cash first benefits or a pure cash policy, from a mutual company or not.

    Today 80% of all care is being provided by an unpaid family caregiver. That is not going to change anytime soon, especially, with the higher prospect of multi-generational living, and cuts to Medicaid and Medicare.

    In closing I too am very dishearten with greed. Its not just wall street. Its running ramped in all aspects of american life from banking to our political system. We need more dialog like this so we all can step back and revisit what is best for everyone in all services and products we take to the market place. The protests that currently happening are shedding some light, we all need to pay attention

  4. Barbara Hanson on March 31, 2012 at 10:29 pm

    If the policy has inflation built-in, then in 3-4 months of care, she will have the $52,000 back. She bought the policy to have either quality care, avoid Medicaid, protect the family, save her assets or just be in control of her destiny. Maybe a little less coverage is necessary today due to a cash flow problem. If so, shortening the policy may be ok. At 88, maybe dropping inflation will be ok. To buy what she has now would probably cost her $15-18,000 a year in premium. If she never needs it, praise all good things. If she uses it, no one will regret the cost.
    Today’s LTCi is an insurance many will use. When it was a nursing home only policy, it was not used as much. Now with home and luxury assisted living, claims are much more likely to be exercised. Even with rate hikes, it is better than the alternatives of less choice and high cost out of pocket.

  5. Nancy Little on October 15, 2012 at 5:39 pm

    My experience with MetLife long term care insurance department has been nothing short of total frustration. It is inconceivable to me how often faxes can be “lost” or “not received” even after having been sent multiple times. The customer service tactic seems to be to discount the efforts of the client/clients’ agents to communicate with the department. I have been told numerous times “we left messages” when that was not what happened. Being meek and mild does not serve you well in dealing with MetLife. Being assertive and able to spend hours on the phone is the only way to make any progress. Once again, I expected a call back before 5 o’clock to see if an issue has been resolved. Once again, the issue is carried over yet another day. This current issue has been on-going since Sept.

  6. mark kelly on November 30, 2012 at 1:01 am

    In 2012, MetLife sought and received approval from the DC Courts to raise their long-term care insurance premiums by an astounding 45%! If indeed this rate hike occured due to a “mistake” in MetLife’s underwriting calculations… are any of MetLife’s analysts going to be held accountable? After all, consider the financial harm this “mistake” could cause hundreds, if not thousands, of policy holders and their families in the future. It should be pointed out that over the last decade MetLife consistently encouraged policy holders to pay increasingly higher annual premiums to cover projected increases in long-term care cost. Thus, raising premiums an additional 45% may now put the cost of these policies out of reach for many policy holders who are, or will be, on fixed incomes during retirement. MetLife claims that premiums may be returned (without interest or additional benefit) to policy holders who have an “optional nonforfeiture benefit” if the policy holder can no longer afford the policy, but not until (and only if)the policy holder qualifies for long-term care, which might be 30 to 40 years down the road… In the meantime, MetLife will apparently continue to earn interest on these premiums. Thousands of honest, hardworking individuals trusted this company with not only their long-term care, but also their family’s future. In my opinion, MetLife needs to step up and do the right thing… offer an immediate refund of premiums to their long-term care insurance policy holders. This would at least allow customers the ability to recover their hard-earned money and reinvest it in alternative sources of long-term care. I believe this action would demonstrate integrity on the part of MetLife and show that this company can be trusted. Otherwise, why should a consumer continue to do any business at all with this company? For, what’s to prevent MetLife from making equally egregious rate hikes in the coming decades as policy holders near retirement age… rendering these policies unaffordable when they are needed most. Granted, policy holders understand that rates can change, but in my humble opinion this rate hike is so severe that it undermines the very foundation of customer trust, which leads me to say, “MetLife, I’m truly sad I met you”… do the right thing!

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