Tuesday, May 8, 2018

No. 265: Long-Term Care Insurance—A Review of Policyholder Complaints in Indiana in 2015-2018

In recent years, in response to my several blog posts about long-term care (LTC) insurance, I received many emails from policyholders disgruntled with their LTC insurance companies. Most of the emails related to claim problems or premium increases. In April 2018, to learn more about the subject, I contacted the insurance department in Indiana, my home state. I asked for information about LTC complaints filed with the department in 2015, 2016, 2017, and thus far in 2018. In response, the department sent me a list of 132 complaints: 44 in 2015, 39 in 2016, 38 in 2017, and 11 thus far in 2018. Here I comment on the information the department provided.

Structure of the List
The list has six columns. The first column is "type." All but one of the complaints related to "LTC." The odd complaint related to "Medi." The second column is "category." All the complaints are categorized as "claim handling," "policyholder service," or "underwriting." I believe that there were complaints about "premium increases," and that such complaints are in the "policyholder service" category. The third column is "respondent," and shows the name of the insurance company.

The fourth column is "complaint confirmed." Each complaint is shown as "Y" or "N." In answer to my inquiry, a department spokesperson said a complaint is confirmed as "Y" (or "Yes") if the department determines that the company violated a statute, violated a policy provision, or made an error. The fifth column shows the date the complaint was filed. The sixth column shows a complaint identification number.

Distribution by Company
The list identifies 31 companies. Those with five or more complaints filed against them during the multiyear period (the number of complaints filed against each company is shown in parentheses) are Bankers Life & Casualty (20), Genworth (15), John Hancock (14), Senior Health Insurance Company of Pennsylvania (14), Continental Casualty (10), Transamerica (10), Pyramid Life (7), and Constitution Life (5).

An Extrapolation
I have written extensively about Senior Health Insurance Company of Pennsylvania (SHIP). My blog posts have dealt with SHIP's worsening financial condition and litigation over claim practices. I decided to extrapolate from the number of complaints against SHIP filed in Indiana to the number of complaints filed against SHIP nationally. I selected SHIP for two reasons: it was near the top of the list above, and it is running off only LTC business.

According to Schedule T on page 49 in SHIP's statutory statement for the year ended December 31, 2017, SHIP's 2017 national premium volume, including premiums waived, was $99.48 million. SHIP's 2017 Indiana premium volume was $2.36 million. Thus the national figure was 42 times the Indiana figure, and the extrapolation suggests that about 588 complaints may have been filed nationally against SHIP during the multiyear period.

General Observations
No tabulation of complaints filed with state insurance departments can scratch the surface of the dissatisfaction level among consumers. In the first place, many individuals do not know an insurance department exists in every state, and many individuals who know about insurance departments do not know the departments accept complaints. In the second place, it requires considerable effort to prepare a formal written complaint and assemble the relevant documents that should accompany the complaint. To add to the problem, it is rare for a consumer to receive satisfaction as a result of filing the complaint. About all a consumer can reasonably expect from the filing of a complaint is a more detailed explanation of the position taken by the company. In short, if there were indeed almost 600 complaints filed nationally against SHIP alone in the past few years, I think it demonstrates a high level of dissatisfaction among consumers regarding LTC insurance.

Available Material
I am offering a complimentary 7-page PDF consisting of the tabulation that the Indiana insurance department provided to me (6 pages) and Schedule T in SHIP's statutory financial statement for 2017 (1 page). Email jmbelth@gmail.com and ask for the May 2018 package about LTC complaints.