State Farm Insurance has announced it will suspend offering new long-term care insurance policies in California, Arizona, Connecticut, Hawaii, Indiana, Nevada, and New York.
A Los Angeles, California State Farm agent’s office manager told SHN that Thursday was the last day her office would be writing new long-term care insurance policies, as the office is closed on Friday for the holiday weekend. By Monday, she said, no new policies would be written.
The move is not expected to be permanent, although there is no timeline at this time to reintroduce offering new long-term care insurance policies, a State Farm spokesperson told SHN.
“State Farm believes long-term care coverage is an important, necessary protection for our customers,” said the insurance agency in a statement. “Although it has challenges, we frequently review and refine our business model with the intention of continuing to offer this coverage.”
The entire industry has been “challenged” as care costs increase significantly and the volume of consumers beginning to use their benefit spikes, said State Farm.
“While these issues need to be continuously managed, State Farm intends to continue to offer long-term care insurance as long as the marketplace and the regulatory environment allow,” the company said. “We also believe it is important that long-term care insurance business fundamentals are sound and rate adequacy is maintained.”
A John Hancock long-term care insurance salesperson said it was “not surprising” that competitor State Farm had withdrawn from the market in California. John Hancock also pulled its long-term care insurance product out of California in 2010 before returning in February 2012 after working to reprice policies, he said.
“There are several reasons why an insurance company ceases selling products in certain states,” said Jesse Slome, executive director of not-for-profit trade group the American Association for Long-Term Care Insurance, in a statement to members on Thursday. “It could be in anticipation of filing a newer product with State Departments of Insurance, during which they no longer want to offer a product they believe is underpriced to pay future claims.”
Written by Alyssa Gerace