Long Term Care Insurance: A Survey of Providers’ Attitudes
The announcement of the Federal Government’s “Living Longer, Living Better” aged care reform package in April 2012 has stimulated debate around potential mechanisms to fund long term care in Australia.
With the considerable costs of long term care faced by many Australians, there is definite scope for the investigation of a range of methods for insuring against these costs that are used elsewhere in the world. One such mechanism is long term care insurance (LTCI), for which private markets are found in many countries, including the USA and France, but which little is known in the Australian context.
This research report, authored by Bridget Browne of the Research School of Finance, Actuarial Studies and Applied Statistics at the Australian National University, examines the potential of a LTCI market in Australia from the perspective of providers.
It is based on a combination of anonymous email surveys and personal interviews of relevant senior officers of life insurers, life reinsurers and major financial services consultants active in the Australian market, as well as other interested parties. Among the issues examined are their attitudes to LTCI and the barriers to its implementation in Australia.
Overall, respondents indicated in-principle support for the development of LTCI in Australia, however they noted significant demand-side barriers to its establishment. These include uncertainty about the extent of consumer demand for such a product in Australia, especially given other risks to insure for and financial pressures faced by households for housing and retirement income.
Respondents also expressed that providers such as themselves are unlikely to attempt to develop LTCI products until they are confident that government has laid necessary groundwork, because of many other failed attempts around the world.
This report provides other detailed information that informs not only the development of LTCI products in Australia, but context for the development of other insurance products.
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