Due to their fantastic job of forecasting use rates for long term care insurance, John Hancock Insurance Company decided they needed to raise premiums by $1 billion to make up a shortfall. Analysts don’t think this will be allowed – read here.
I am a bit concerned and have been about this for a while – though I have no in-depth knowledge of the industry’s data on insurance mortality and such – we can only do so much in planning. Many people need this insurance and hope that it does the job and for most people it likely will. Of course if too many Americans live too long and use too much benefits, the math will skew. We’ll have to watch and see. If Bernanke keeps rates low forever, as he is inclined to do in my opinion, that not only hurts the seniors who save and depend on their interest income as I have written about MANY TIMES, but further hurts the ability of insurance companies to earn decent interest safely on government bonds, interest which helps fund the VIABILITY of these insurance policies.
Somehow, hoping Bernanke and the Fed going down as “boob central” in the history books does not seem to do justice to the millions of seniors, pensions, and insurance companies he will likely bankrupt/blow up in the next few years.
p.s. – perhaps it’s not the fault of actuaries – who could predict a psychopath would leave interest rates at ZERO for years and ruin everyone’s projections?
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