As in our previous news blasts, “The California Long-Term Care Summer of 2019,” we attempted to provide you with an overview of the many events that have occurred in the LTC Insurance industry from a national as well as of California perspective, up through the month of August.
Well, just in the last two weeks, all hell has broken loose in the field of LTC and it is about to get even more interesting. Here are the highlights:
- A forensic accounting analyst says the situation at GE LTC reinsurance business is much worse than the company has admitted.
- Genworth Financial and Brookfield Business Partners announced an agreement for Brookfield to purchase Genworth majority interest in Genworth MI Canada. Genworth Canada is the largest private-sector residential mortgage insurer in Canada.
- CALPERS faces very serious risk in 1.2 billion LTC case. The judge is urging CALPERS to settle a major lawsuit over price increases for its LTC Insurance policies, suggesting the system could have to pay a lot of money if the lawsuit goes to a jury trial in October.
- In June, Governor Gavin Newsom issued an executive order calling for the creation of a master plan on Aging, to be overseen by the California Health and Human Services Agency. I have been asked by a previous Task Force member to assist in providing information on how the California Partnership can play an integral part in the financing of long-term care services and supports as part of the overall master plan on aging.
We have received many emails from previous students asking about the implications regarding the financial viability of the current block of GE’s long-term care business, including questions like “does this have any impact on my current Genworth LTC policy or policies?” The simple answer is no, it has nothing to do with Genworth.
Back in 2004, GE spun off a large portion of its insurance lines – life, annuity, LTC and mortgage insurance – into an IPO offering called Genworth, a separate new company from GE. Not all the blocks of LTC business were moved to Genworth, however if your policy was not converted to Genworth and is still under GE Financial that’s a different question.
According to a recent report issued by Goldman industrial analyst Joe Ritchie and insurance analyst Alex Scott, they examined GE’s life insurance reserved shortly after the release of the Markopolos report and said the company had higher reserves on a per life basis than some peers. ERAC had the third-highest reserves per life and UFLIC had the fifth largest reserves per life, according to Ritchie and Scott, referring to GE’s two life insurance subsidiaries that hold Legacy LTC policies.
Speaking of Genworth, it has been disclosed that Genworth has sold its stake in Genworth Canada, estimated to be approximately $1.8 billion, to increase the likelihood of subsequently completing the acquisition of Genworth by China Oceanwide Holdings Group.
In connection with Oceanwide’s transaction, Genworth and Oceanwide entered into the 12th waiver and agreement, extending the merger agreement deadline to not later than December 31st 2019.
Genworth also believes that the sale of its stake in Genworth Canada will allow it to increase its financial flexibility, whether or not the Oceanwide transaction is consummated. The plot thickens!
According to the Sacramento Bee, August 14, 2019, the lawsuit against CALPERS, filed in 2013, alleges CALPERS violated contracts when it hiked premiums by 85% for about 100,000 public employees after promising stable prices in marketing materials.
If the lawsuit goes to trial as scheduled on October 30th, a jury will decide whether CALPERS did or didn’t increase premiums specifically because of the inflation protection benefit. The jury could decide whether all, none or part of the increase was specifically due to the benefit, which would determine how much money CALPERS would have to pay, if any. The plaintiffs have estimated the lawsuit could cost CALPERS $1.2 billion if the retirement system loses. Stay tuned!
Executive Department of the State of California
Executive order N-14-19
Whereas the state of California values older Californians and is committed to building an age-friendly state, so that all Californians can age with dignity and Independence, and whereas California’s over-65 population is projected to grow 8.6 Million by 2030 and increase of 4 million older Californians.
You all need to understand that the numbers mean to you and your clients who don’t have LTC insurance yet, is that the longer they wait, the more costly it’s going to get in terms of premium cost, eligibility and affordability as it relates to their current long-term care plan of self-insuring. But remember, money just pays for long-term care, health buys it!
It is further ordered that by October 1, 2020, a master plan be developed in issued to serve as a blueprint for state government, local government, private sector and philanthropy to implement strategies and partnerships that promote healthy aging and prepare the state for the coming demographic changes.
We at Senior Insurance Training Services and the Ad Hoc Task Force for Long-Term Care Partnership are not going to wait for October 1, 2020 to submit our plan. For the remainder of 2019, we at the at the Ad Hoc Task Force are planning an aggressive effort to motivate all LTC insurance carriers who are committed to developing simple, affordable and easy to understand Long-Term Care Partnership plans that provide asset protection, unique care management, rate caps, State certified and state endorsed LTC insurance that not only meets, but exceeds other states and federal programs.
Due to the most recent State Legislature actions in the new and improved California Partnership could cost roughly 60% cheaper than the current offerings made under the old guidelines.
To learn more about the new changes and become part of the solution, then maintain your LTC Insurance and California Partnership certification by signing up new LTCI CTQ course and the new and completely updated Partnership course, which both are now offered by webinar live by Tom Orr, who brings you over 31 years of LTC Insurance experience.
Both classes come with PowerPoint syllabus, illustrations regarding the new plan design approach of short and thin and why, claim statistics, utilization charts, step down conversions charts, the 25-year Buey-Non-Buyer Survey and the new rate increase checklist and how to use it.
Call 707-696-0389 or simply go to https://ltcce.com and sign up. You can also email Tom Orr at [email protected] for more information. Don’t be left behind! Come learn and stay updated on the rapid changes affecting LTC Insurance in California today and in the future.
Coming next week – the new suitability consumer best interest standard coming to California!