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Taking care of business

Immediate Needs Forum chairman Robert Hamer is so concerned about NU’s withdrawal that he is looking very closely at GE Life, one of the remaining three LTC providers, to check it does not also intend to pull out.

He says: “Partnership Assurance is here to stay as they specialise in this area and Axa’s market share is huge so it is not likely to withdraw from the market but we are looking nervously at GE Life to see if it remains in the market.”

GE Life product and marketing manager Matt Trott has moved to give assurance to advisers, saying: “We have no plans to exit this market. We see it as having great potential due to the increases in life expectancy and the rising number of people requiring long-term care in the future.”

Trott does not think NU quitting LTC is a surprise because he says the company has not been competitive in the market for some time. But he says it is a backward step for LTC and says NU’s immediate care plan is a good product.

He says: “The key barrier is that people are not aware of these LTC products and the benefits of them. We need more providers in the market and it is up to the remaining three to be more proactive.”

Trott is not aware of any other providers looking at this market but hopes that one or two will see the opportunities available and offer an LTC product.

People may look to Bupa to re-enter as it is a household brand associated with providing private medical insurance and care. The firm withdrew from LTC in 2003 and had a very small port-folio of around 400 plans.

But Bupa says it has no plans to go back into the market although it continues to honour the policies remaining on its books.

Trott says the promotion of the LTC sector must be achieved by raising awareness, improving consumer and adviser education and encouraging more advisers into the area. Trott considers that advisers often perceive LTC as a niche segment of advice and ignore it as it adds little value to their business. He says advisers need to realise it is a good investment of their time to be active in this area and says commission on these products is favourable at around 4 per cent.

Nursing Home Fees Association managing director Phil Spiers is adamant that there are huge opportunities in the LTC arena and he does not think that NU has realised the potential of the market.

He says: “Advisers are probably only reaching about 4 per cent of the potential market so it is a great shame that Norwich Union has pulled out. We have significant plans to reach more people and in the first quarter of next year we predict there will be considerable growth in this market.”

But not everyone was disappointed by NU’s move. Symponia managing director Jeremy Davies says he was relieved it was NU and not one of the other providers which withdrew. He feels NU leaving is no loss to the market because he claims the firm’s service and quotes were “dreadful”.

Partnership Assurance sees NU’s retreat as creating opportunities for other providers. Chairman Ian Owen says the demand for long-term care will increase significantly in the next few years as baby boomers move through retirement and into care.

Owen estimates one in three people will require some level of care and says around 32 per cent of people fund their own care at present. He says in 2000 the UK’s older dependent population numbered around three million and this is expected to double by 2051, with advisers holding CF8 well positioned to benefit from this demographic.

Owen says: “Everyone is aware that we are living longer but few people realise that a higher percentage of that time is spent in ill health and hence the necessity for advised long-term care. In 1981, the expected time lived in poor health for males was 6.5 years but by 2001 this had risen to 8.7 years.”

Sesame product manager Phil Hull says he was surprised by NU’s decision but says it provides a great opportunity for others to push the market forward.

Hull says when the pre-funded LTC market died out, it was assumed that the immediate care market would follow suit but he says the opposite has occurred and there is slow but steady growth in the immediate LTC sector.

He thinks there needs to be more homogenisation in the marketplace because there is too much disparity in the underwriting, which means it is hard for consumers to understand what is being offered.

Hull says the responsibility for driving the market forward should be shared between providers, advisers and the care homes.

He says: “Providers need more communication with consumers and advisers and they need to simplify their product. The care homes do not do enough either and advisers should work with care homes to create a far more cohesive approach.”

Hull believes some form of working party could be created to bring all three groups together to address some of the issues. He says LTC advice should be a standard part of retirement planning and not seen as a niche product.

He adds: “A provider leaving a market is never a good thing. It sends out the message that they do not see opportunity, which could put off those providers that are considering whether to enter the LTC market.”

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