Futuristic Scenarios for LTCI

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Futuristic Scenarios for LTCI

• Session 25 February 28, 2006
• Session Producer
• John Timmerberg, President Timmerberg
  Associates, Inc.

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PANEL

• Jim Glickman, President and CEO, LifeCare
  Assurance Company
• Greg Gurlik, Director LTC Product Development,
  Northwestern Mutual
• John Timmerberg, President, Timmerberg
  Associates, Inc.

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Futuristic Scenarios For LTCI

• In this Open Forum session, panel members will
  briefly present and debate a Futuristic Scenario.
  After each Scenario, we will look to audience
  members for discussion and debate.

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Futuristic Scenarios For LTCI

• Over 50 of the session will be devoted to
  audience participation.
• We will cover four or five fully developed and
  distinct scenarios.

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Futuristic Scenarios For LTCI

• We will discuss and debate future developments
  involving the following topics
• Economic developments
• Product innovations
• Changes in the regulatory environment
• Senior health and wealth
• Changes to government programs
• Care delivery

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Scenario 1

• Federal Government Action
• increases employment for the over-65
• Global Competition - Price Stability
• Very low interest rates
• Strong growth in asset values
• Size of LTCI market is expanded
• Diverse collection of niche markets

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Scenario 1 - continued

• Product Innovations
• Interest sensitive product
• Product structured as a put on planned asset
  accumulation
• Product with a variable elimination period, based
  upon 50 of home equity value

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Scenario 2

• LTCI through annuities
• Inexpensive home testing for genetic indicators
• Liberalized underwriting for employer groups
• LTCI through expanded 401(k) programs

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Scenario 2 - continued

• Medical advances impact underwriting tools and
  placement rates
• Very liberal underwriting of products written
  through 401(k)
• Rapid expansion of market
• Leads to poor early claims experience
• Federal Government action
• LTCI is mandatory
• Vouchers program initiated for Medicaid eligible

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Scenario 3

• LTC piece of Medicaid is Federalized
• Higher interest rates
• Lower premium
• Larger market
• RBC and ratings agencies
• Aggressive entry of new companies

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Scenario 3 - continued

• Online processes
• Online medical records leads to kitchen table
  underwriting decisions
• 50 sold through internet
• Competitive pricing reinsurers
• Competitive products leads to day of reckoning
  for several insurers

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Scenario 4

• Substantial premium rate increases continue
• Industry looks for Exceptional rate increases
• Denied
• Reserves mandated tables for claim costs and
  claim termination rates

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Scenario 4 - continued

• Stories of impoverishment
• Pressure to solve LTCI crisis
• Medicare expanded to first 180 days
• Nationwide Partnership program 3 yrs
• Medicare Part L is introduced
• 80/20 split in costs
• Four standardized products
• Mainstream product and Market is greatly expanded