Population ageing and its well-being is one of the most critical challenges faced by our societies. People live longer (thanks to better healthcare, hygiene, and generally healthier lifestyles) and lonelier. The elderly segment of industrialized countries is growing much faster than the younger, driven by more affluent generations and lower fertility rates. The demographic trend in most developed countries will carry consequences for which we are not ready.
In the US, by 2030, every Baby Boomer will be 65 or older: 1 out of 5 US citizens will be of retirement age.
Individuals hope for a healthy and prosperous ageing process to enjoy life autonomously until death. While that is the optimal situation, it won’t be a reality for everyone. How may individuals prepare for aging and increase their independent living years while covering themselves for dependency needs?
In the US, healthcare coverage throughout an adult life follows standard practice. While exceptions exist, an employer generally provides coverage until retirement, and Medicare plans do so from retirement until death. Adults can expect decent hospital and medical services coverage. However, neither public nor private health insurance covers the dependency needs related to aging. These refer to the care needs derived from the inability to live autonomously as a result of cognitive and/or physical impairment. There is a vast, uncovered gap for the nearly 70% of 65-year-old people who will need long-term care services or support, with yearly costs surpassing $50k annually on average.
As a society, we need to provide new solutions for this reality. We believe higher levels of technology penetration in the aging generation will allow technology innovations to improve the coverage of the group's needs, wants, and expected life quality. The aging population's needs will present one of the largest opportunities in the next decade for innovative companies covering a historically underserved sector.
US insurance companies released the first Long Term Care Insurance products in the 60s. The products were highly successful given the need for coverage options for aging needs until then. However, insurance companies poorly anticipated the risks associated with LTC and recorded significant losses on them.
US population demographics changed drastically, with life expectancy improving from about 70 years old in 1968 to almost 80 years old in 2016. During this period, the population increased from +200m to +320m. Missing the increases in lifespan and expected claim rates led to very unprofitable portfolios making most LTC insurance companies nearly go into default. Subsequently, the number of active LTC insurers went from >100 to 12; premiums increased significantly, and the number of standalone LTC products sold annually dipped (from 700,000 in 2000 to just under 49,000 in 2021). Most carriers see LTC as a complex product with too much associated risk.
As a partial solution, hybrid products with an LTC component were created in the early 2000s; LTC hybrids are traditional Annuities & Life retirement products with a rider that allows the policyholder to extend and anticipate policy proceeds for LTC-related costs. The products enable the policyholder to have some optionality in case of need while preserving some of the Annuity/Life proceeds if the LTC rider is not used. On the insurer side, they allow carriers to offer LTC insurance with the Life/Annuity policyholder’s expected payout as “collateral.” These products are commercialized mostly by LTC carriers and agents. While the risk is lower than with standalone LTC products, the underwriting process of the products is outdated, requiring human intervention and generally days to assess the policyholder risk profile.
Assured Allies (AA) is redefining LTC insurance in the US, a highly inefficient segment of the insurance industry driven by historical risk mismanagement, tedious underwriting, and outdated policy management procedures. AA provides a complete solution to insurance carriers to help their policyholders achieve this goal. The company serves carriers to manage portfolio risk, develop new de-risked products with a Long-Term Care (LTC) component, and support policyholders through their aging with preventive care.
Assured Allies has developed a data-driven automated underwriting process that is vetted by reinsurers and takes <1h, removing the hurdle for immediate closing. AA underwriting and preventive care programs allow insurance companies to offer a completely differentiated product in a commoditized market while providing policyholders with tools to improve their chances of aging successfully.
This creates a new situation in the retirement products industry, a $400B/year market, allowing traditional retirement insurers to offer a customer-centric product considering policyholders’ well-being and needs. Assured Allies acts as a platform managing the customer journey, allowing insurance carriers to differentiate themselves in a commoditized market without any LTC-associated risk or modifications to their business models.
We believe the team at Assured Allies has the capabilities to transform the Long Term Care Insurance industry and set a new ageing standard for the elderly.