STCi New Business Premium Up 13 Percent in 2016

New business premium for short-term care insurance policies (STCi) rose 13.2 percent in 2016 over the previous year as agents continue to show interest in the product line, according to new data released Wednesday.

The number of STCi policies grew by 16.6 percent in 2016, the National Advisory Center for Short-Term Care Information reported.

The National Advisory Center does not release dollar amounts for new business premium volume and the number of new policies sold.

Data was collected from six of the larger insurers selling STCi, the National Advisory Center said.

STCi new business premium growth rose 14 percent in 2015 compared with 2014, while policy sales growth rose 19.6 percent.

“I don't enter a year with any expectations but I will tell you that the number of agents that call us about getting trained and licensed (for STCi) has increased,” said Jess Slome, director of the National Advisory Center.

“Based on that, I expected the (2016) numbers to increase,” he said.

STCi typically covers a policyholder for a 360-day period or less for costs associated with home health care, assisted living facilities, skilled nursing home stays and adult day care and hospice.

Periods longer than a year are covered by long-term care insurance, or LTCi.

In 2015, the average yearly cost of an STCi policy was $1,043 and insures sell thousands of STCi policies every year.

STCi Sales Boosted by Awareness, Fill a Gap

Agents who sell Medicare insurance solutions are turning to STCi to help fill coverage gaps for seniors.

STCi is a less expensive – albeit temporary – alternative to LTCi and as more agents become licensed and appointed to sell STCi product, awareness spreads.

“Everything starts with awareness,” Slome said. “Nobody wakes up saying 'I need to buy STCi.' That's the difference between insurance and Starbucks.”

But some agents don’t see enough value in STCi since LTCi can be bought for just a few more dollars in monthly premium, yet will last much longer.

Many STCi products, which use outdated pricing models, don’t have the same protections against rate increases embedded in many LTCi policies, STCi critics say.

“Regulators are looking at the whole industry, as they should, but the bottom line is it’s a solution for people,” Slome said.

Insurance Bright Spot

STCi products have existed for many years but tracking STCi sales began only two years ago and recent sales increases are encouraging.

Many other insurance product lines would love to boast about a double-digit percentage increase, said Slome.

Sales of LTCi in 2016 compared with 2015 were down so the fact that STCi sales are up by double-digits is good news, Slome said.

The National Advisory Center’s first STCi summit will be held in Dallas next month and the conference runs in conjunction with the American Association for Medicare Supplement Insurance's Ninth Medigap industry summit.

The STCi meeting is expected to attract companies interested in entering the market and that’s a good sign, Slome said.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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