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Breaking Down Barriers And Bridging Gaps





By Tony Laudato

Recent months have seen a steady drip of bad news from life insurers, as firms have had to boost their reserves to the tune of billions in an expectation of soaring payouts for long-term care insurance policies.

While troubling, the news simply confirms something that has been fairly obvious for some time: the old long-term care market – once popular as a means of funding assisting living, nursing home and home care services – is now more of a headache than an opportunity for insurers.

The market now must significantly review assumptions made long ago when the first such policies were written, during a period when interest rates and projected lapse rates were higher and health care expenses lower. To say the equation has shifted would be an understatement. The cost of assisted living has increased by 67 percent over the past 15 years, according to the Genworth Cost of Care Survey. Meanwhile, one in two Americans has a chronic health condition, the Centers for Disease Control and Prevention reports.

The resulting increased premiums have decimated the LTCi industry. Many providers have withdrawn from the market altogether, and those that remain must be increasingly restrictive with their policies.

Axing an entire revenue stream, however – especially one that was once so lucrative – is a risky choice to make in a situation where demand is clearly not the problem. The need for long-term care is going nowhere.

As such, the market is increasingly starting to turn to hybrid policies. Hybrid policies work by combining the two types of coverage – life insurance and long-term care – and allow for payouts based on accelerated or early payments of a death benefit. Importantly, the combination also allows insurers to stabilize the risk profile of the product, and provide a sustainable means of growing both the top and bottom lines.

These policies are designed to make LTCi profitable again, and in doing so they may also present a way to partially tackle another problem – the decline in the life insurance market. The number of Americans holding life insurance has been falling steadily for decades and more than 40 percent of Americans have no coverage, according to LIMRA and Life Happens. While this problem is concentrated among younger Americans – not the traditional market for late-life health care – research shows that one of the main reasons younger Americans don’t buy life insurance is a lack of flexibility and innovation in the product itself. LTCi is much cheaper the younger you are when you buy it, and so hybrid policies could well have more appeal here.

The younger market aside, there is every sign that hybrid policies could grow popular among middle-aged and older Americans. As opposed to more traditional standalone policies, hybrid policies provide an option that isn’t “use it or lose it” with regard to benefits. With hybrids, there is still a death benefit even if the LTC benefit isn’t used. For wealthier clients who have accumulated financial assets throughout their lives, hybrid policies additionally provide a way for them to protect those assets from the high cost of late-life care should it be needed.

The current gap in the LTCi market is more circumstantial than reflecting anything fundamental. The financial crash and its aftermath engendered a lack of product innovation, with the LTCi market suffering from this as providers scrambled to de-risk their portfolios. Hybrid solutions, however, offer a solution to this impasse that comes with a far more favorable risk profile, will genuinely benefit all parties involved and could help breathe life back into the ailing sector.

In addition to potentially reopening the LTCi market, hybrid policies could simultaneously help the market reverse the downward trend in life insurance. Evidence suggests that one of the main barriers to buying life insurance perceived by today’s consumers is the lack of flexibility and control associated with traditional products. By addressing this, hybrid policies promise to turn two problems into a new and untapped market for the sector.

As a result of all these favorable factors, sales of hybrid policies are increasing, with more than 260,000 such policies sold in 2017, LIMRA reported. But there is still a long way to go.  Sales of this product have been stymied by an understandable skepticism on the part of the industry, still reeling from the impact of the earlier miscalculations and erroneous assumptions in LTCi that continue to cause losses today.

If the LTCi market is to enjoy a hybrid revival and avoid the mistakes of history, carriers will need to ensure that the design of such products is right, and certainly more robust and well-founded than those of the previous era of standalone products. As the history of the aviation industry teaches us, hyper-engineering is the best form of reassurance.

Given the nascent stage the new product is at, getting it right requires a specific set of underwriting skills, a granular understanding of the pricing and risk modeling involved, a deep expertise in area of mortality rates, and new reinsurance structures to support risk transfer. For those that can get it right, the rewards will be significant.

Tony Laudato, FSA, MAAA, is vice president-partnership solutions with the Hannover Re Group. Tony may be contacted at

© Entire contents copyright 2018 by Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from

The post Hybrid Life/LTCi: Breaking Down Barriers And Bridging Gaps appeared first on InsuranceNewsNet.


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Multiple trucking violations by Humboldt semi driver noted in government report Canadian Underwriter





MELFORT, Sask. – A Saskatchewan government report says the driver of a semi-truck should not have been on the road the day he flew through a stop sign and caused a crash with the Humboldt Broncos team bus.

The report filed during the sentencing hearing for Jaskirat Singh Sidhu notes 51 violations of federal trucking regulations on drivers’ hours and 19 violations of Saskatchewan trip inspection rules.

It includes the 11 days prior to the April 6, 2018, crash at a rural intersection that killed 16 people and injured 13 others.

The wreckage of a fatal collision, involving a bus carrying the Humboldt Broncos junior hockey team, outside of Tisdale, Sask., is seen Saturday, April, 7, 2018. THE CANADIAN PRESS/Jonathan Hayward

“If Jaskirat Singh Sidhu had been stopped and inspected on April 6, 2018, prior to the incident he would have been placed under a 72-hour out-of-service declaration … preventing him from operating a commercial vehicle,” says the report.

The document is signed by two senior Saskatchewan government officials and is included in the RCMP’s forensic collision reconstruction report.

It expresses concerns about the distances Singh was driving as well as the amount of time he took off to rest.

The report notes that if Singh had accurately documented his time at work on April 1 it ‘would have resulted in the driver being in violation of the maximum on-duty time of 14 hours for the day.”

The report says questions remain about what happened the day of the crash.

“We have strong concerns regarding the timelines of Jaskirat Singh Sidhu’s day on April 6, 2018, as there are unanswered questions as a result of the incomplete log on that day,” it says.

“The identified mileage and distances required to travel to the locations identified in the log and known locations also cause concerns.”

Sidhu had been driving for about a month before the crash occurred.

The owner of the Calgary-based trucking company, Sukhmander Singh of Adesh Deol Trucking, faces eight charges relating to non-compliance with federal and provincial safety regulations in the months before the crash.

They include seven charges under the federal Motor Vehicle Transport Act: two counts of failing to maintain logs for drivers’ hours, three counts of failing to monitor the compliance of a driver under safety regulations, and two counts of having more than one daily log for any day.

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Signs of progress on national flood program for Canada Canadian Underwriter





Canada is making good progress on a national flood program, pending a final decision by federal, provincial and territorial (FPT) ministers responsible for emergency management.

“What they are looking at is one national insurance solution to improve outcomes for high-risk Canadians across the country,” Craig Stewart, vice president of federal affairs at Insurance Bureau of Canada (IBC) told Canadian Underwriter in an interview Tuesday. “There may be regional insurance pools adapted to local conditions, but it would be nationally coordinated.”

FPT ministers responsible for emergency management have mandated IBC to lead a national working group to take a look at options and what they would look like. IBC provided three options:

  • A pure market approach (like in Germany and Australia) where governments exit disaster assistance
  • A broadened version of the status quo, but with better-coordinated insurance and disaster assistance
  • Deployment of a high-risk pool analogous to Flood Re in the United Kingdom.

The next step is for the working group, which Stewart chairs, to cost out the pool. “The pool needs to be capitalized as it was in Flood Re,” Stewart said. “So, we need to figure out where that money is going to come from. Is it going to come from governments? Is it going to come from insurers? Where is it going to come from?”

A final decision will be made by ministers after the high-risk pool is costed, which Stewart expects to be completed by June. Decisions on eligibility, how to capitalize the pool, and on any cross-subsidization await the results of that costing analysis.

In addition, this spring, the ministers will hold a technical summit on flood data and science. “Our view of the risk many not align with the government’s view of the risk,” Stewart said. “We need to bridge the gap. This symposium is going to focus on essentially the data and science of flood modelling.”

In early 2020, there will be the launch of a consumer-facing flood risk portal. IBC has been working with the federal government to develop the authoritative flood portal, where consumers can discover their risks and what to do about them.

“Elevating consumer awareness of flood risk is key,” Stewart said. “Consumers aren’t going to be incented to protect themselves or to buy insurance unless they know their risk.”

In May 2018, FPT ministers responsible for emergency management tasked IBC to lead the development of options to improve financial outcomes of those Canadians at highest risk of flooding. IBC worked with a wide range of insurers, government experts, academics and non-governmental organizations to produce the three options, which were tabled with ministers last week.

The ministers released the first-ever Emergency Management Strategy for Canada: Toward a Resilient 2030 on Jan. 25. The document provides a road map to strengthen Canada’s ability to better prevent, prepare for, respond to, and recover from disasters.

“In less than two years, Canadian insurers have secured a mandate with every province and territory to finalize development of a national flood insurance solution, have successfully catalyzed a national approach to flood risk information, have secured over two billion dollars in funding for flood mitigation, and have succeeded in securing a funded commitment for a national flood risk portal,” Stewart said.

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Insurers disagree over meaning of ‘household’ in policy language Canadian Underwriter





A dispute over what exactly constitutes a “household” in a home insurance policy has reached the Court of Appeal for Ontario.

Several members of the Weiner family were sued after a person drowned in 2010 in a vacation home on Lake Eugenia, about 70 kilometres west of Barrie.

The homeowner was Enid Weiner, who had moved to a nursing home in 2008 or 2009 and has since passed away.

The home was insured by Intact. Enid Weiner was the only named insured, but the policy provided liability coverage for relatives of the named insured while those relatives were “living in the same household” as the named insured.

Whether this means Intact is also providing liability coverage for Enid Weiner’s adult son, Scott Weiner, was a source of disagreement among judges and insurers alike.

Scott Weiner, along with his wife and daughter, were named defendants in the drowning-related lawsuit. Also named was the estate of Enid Weiner. Scott Weiner used his mother’s house as a cottage but did not live there permanently.

Scott Weiner’s own insurer, TD Insurance, settled the lawsuit. TD Insurance took Intact to court arguing Intact has a duty to defend the lawsuit.

As it stands, TD has lost its case.

“The mere fact of co-residence is not enough to constitute membership in a household,” wrote Ontario Court of Appeal Justice Bradley Miller in Ferro v. Weiner, released Jan. 28, 2019.

Initially, Ontario Superior Court of Justice Pamela Hebner ruled in favour of TD. In her ruling, released Apr. 12, 2018, she ordered Intact to pay $62,500, or half the cost of settling the lawsuit.

Justice Hebner found that Scott Weiner was in the same household as his mother. He came to the cottage when he wished and took care of it as if it were his own place.

But Justice Miller of the appellate court countered that, at the time of the accident, Enid was living in a nursing home.

“Scott lived with his family in the city and had organized his life around his urban household. Prior to entering the nursing home, Enid lived with Scott’s brother, and not with Scott and his family,” added Miller, citing several court rulings, including Wawanesa Mutual Insurance Co. v. Bell, released in 1957 by the Supreme Court of Canada.

Wawanesa v. Bell arose after Murley Miller was killed in 1955 while driving a Vauxhall car owned by his brother, John Milley.  Other victims of that accident sued Miller’s estate. Murley lived at John’s home in Sarnia.

The court in the 1957 case defined the term “household” in the following way:

“The ‘household,’ in the broad sense of a family, is a collective group living in a home, acknowledging the authority of a head, the members of which, with few exceptions, are bound by marriage, blood, affinity or other bond, between whom there is an intimacy and by whom there is felt a concern with and an interest in the life of all that gives it a unity.”

Members of a household could include domestic servants and distant relatives living there permanently, the court found in 1957.

“Although a household is not synonymous with a family, the existence of a household is evidenced by the extent to which its members share the intimacy, stability, and common purpose characteristic of a functioning family unit,” Judge Miller of the Court of Appeal for Ontario wrote in 2019 in Ferro v. Weiner.

Members of a household “typically share a residence and resources, and integrate their actions and choices on an ongoing and open-ended basis,” added Miller.

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