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Academy/SOA Long-Term Care Valuation Work Group Update to the NAIC LTC Actuarial Working Group Bob Yee, Chairperson Academy/SOA Long-Term Care Valuation Work Group April 5, 2013 Copyright Š 2013 by the American Academy of Actuaries All Rights Reserved. NAIC Spring Meeting April, 2013


American Academy of Actuaries The American Academy of Actuaries is a 17,000-member professional association whose mission is to serve the public and the U.S. actuarial profession. The Academy assists public policymakers on all levels by providing leadership, objective expertise, and actuarial advice on risk and financial security issues. The Academy also sets qualification, practice, and professionalism standards for actuaries in the United States.

Copyright Š 2013 by the American Academy of Actuaries All Rights Reserved. NAIC Spring Meeting April 2013

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Progress •

Received Excel workbooks with policy and claim records of 13 companies from Medical Information Bureau • Enabled calculation of incidence and claim

termination rates by company •

Reviewed summary data for each company

Assessed data quality and limitation

Copyright © 2013 by the American Academy of Actuaries All Rights Reserved. NAIC Spring Meeting April 2013

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Data Summary Study Period Number of Companies Number of Exposures Number of Policies Number of Claims

1984 - 2007 13* 29,000,000 5,450,000 217,000

* Out of the original 18 companies that contributed in the 2007 study. Copyright Š 2013 by the American Academy of Actuaries All Rights Reserved. NAIC Spring Meeting April 2013

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Data Summary (cont.) Findings of 200 Random Claim Records from Each Company % % % % % % % % Inforce % % % out of % Most without % Earliest Latest Recent without without force but without without but no without without without without without Daily without Coverage EP Benefit BIO Term Prem Martial Benefit Issue Issue Study Gender Issue no Term Type EP $ Benefit Type Type Pay Status Date Code Cause Date Year Code Company Year Year C D E F G H I J K M O S T U V Z zd zf

1980 1984 1985 1991 1997 1988 1985 1988 1987 1990 1989 1988 1988 1986 1986 1990 1988 1983

2001 2004 2002 2003 2005 2007 2003 2005 1994 2005 2003 2002 2000 2005 1991 2004 2003 2004

2001 2007 2004 2003 2007 2007 2007 2007 1995 2005 2004 2007 2007 2007 1991 2007 2007 2007

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

13% 6% 2% 0% 0% 0% 5% 3% 0% 6% 1% 0% 0% 25% 0% 5% 0% 0%

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 5% 0% 0%

13% 6% 2% 0% 0% 0% 100% 3% 0% 6% 1% 18% 8% 100% 0% 100% 0% 0%

13% 6% 5% 0% 0% 0% 5% 3% 1% 6% 1% 0% 0% 25% 0% 5% 0% 0%

40% 0% 2% 1% 0% 0% 1% 73% 68% 12% 70% 27% 20% 30% 58% 50% 0% 0%

13% 6% 2% 0% 0% 0% 5% 99% 0% 13% 1% 18% 8% 34% 0% 5% 0% 0%

19% 6% 2% 0% 2% 0% 7% 3% 0% 6% 1% 0% 0% 67% 0% 65% 0% 0%

37% 6% 2% 0% 1% 0% 5% 3% 0% 6% 89% 1% 0% 67% 0% 65% 0% 0%

40% 40% 10% 33% 42% 14% 16% 3% 36% 18% 1% 13% 5% 67% 2% 77% 47% 13%

37% 6% 2% 4% 1% 0% 5% 3% 0% 6% 89% 13% 3% 67% 100% 65% 0% 0%

37% 6% 2% 0% 1% 0% 5% 3% 0% 6% 0% 1% 0% 67% 0% 65% 0% 0%

13% 6% 2% 0% 0% 0% 5% 3% 0% 6% 1% 0% 0% 25% 0% 5% 0% 0%

% Recomwithout mended to be Zip Code Excluded * 8

75% 6% 2% 6% 0% 100% 100% 3% 0% 100% 100% 17% 9% 99% 100% 99% 0% 100%

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8 8 8

* The 5 excluded companies contributed 25 percent of total claim records. Copyright Š 2013 by the American Academy of Actuaries All Rights Reserved. NAIC Spring Meeting April 2013

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Data Summary (cont.) Distribution of Claims  Company * D E F G H I J M O S T zd zf

Total

Compre‐ hensive

NH Only

          20,151                   35

                  81           16,716                 685

            7,319             6,765

            2,985             2,462

            1,451                      3             1,200                 520

                  59

            1,352

          16,354             6,740             4,055

                771

Total         216,974           48,106 # Selected Claims         148,985           48,071 69% % Selected

HHC Only

Unknown           52,202                   85

            1,645             1,016                 139

            8,017             3,644             1,006           27,642

          21,121

          10,753

          63,297           63,157

          37,757           37,757

          67,814

Copyright © 2013 by the American Academy of Actuaries All Rights Reserved. NAIC Spring Meeting April 2013

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Data Summary (cont.) Average Length of Stay Nursing Home Only

Comprehensive Company *

 Nursing Home 

ALF

 Home Care 

Others

1 2 3 4 5 6 7 8 9 10 11 12 13

           858

Composite

           665            855            782            313

 Nursing Home 

ALF

 Home Care 

Home Health Care Only Others

           847            913            821            382

           536            536            358            493

           467            494            444            219            693        1,272            911            136            313

           405            215            658        1,615            431            561            474            893            470

           529            678            523            391            822            860            579            ‐

           387

 Nursing Home 

ALF

 Home Care 

Others

           464            722            975            236

       1,280            597            583            681            551            473            581

           428            653            324            594            352            427            692            603            421            352            638

           974

       1,312

       1,114            278

           531            740            412            182            353            439            339            273            779            911            675            217

           934            485            633            385            432

           748            826            469            186

* Company identifiers are different from that on the prior pages. Copyright © 2013 by the American Academy of Actuaries All Rights Reserved. NAIC Spring Meeting April 2013

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Assessment • Current data is inadequate to produce an

industry-wide table • Insufficient number of companies represented • Data quality varies significantly among contributing

companies • Significant amount of data has unidentified coverage

Copyright © 2013 by the American Academy of Actuaries All Rights Reserved. NAIC Spring Meeting April 2013

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Recommendation • Not to pursue a valuation table based on current

data • Wait for the next intercompany data update

provided by the SOA LTC Experience Committee • Additional information will be available (e.g., data

on inflation protection options) • Encourage more companies to participate Copyright © 2013 by the American Academy of Actuaries All Rights Reserved. NAIC Spring Meeting April 2013

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Next Steps • Although the entire data set is not sufficient for

an industry-wide table, there is some selected data that may be useful for comparative studies • Decision by the SOA LTC Experience Committee • Develop a tool for users (Excel pivot tables)

• Document the committee’s work, the data

quality criteria, and data specifications

Copyright © 2013 by the American Academy of Actuaries All Rights Reserved. NAIC Spring Meeting April 2013

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Academy Staff Contact Information Tim Mahony Health Policy Analyst (State) mahony@actuary.org 202-785-7880 1850 M St., NW, Suite 300 Washington, DC 20036

Copyright Š 2013 by the American Academy of Actuaries All Rights Reserved. NAIC Spring Meeting April 2013

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LTC_ValuationWG_Update _LTCActuarialWG_Spring _2013_Mtg _Apr5