Canassurance Blue Cross is bowing out of the long-term care insurance market by stopping sales of its Tangible product. There will now be only one player left in this niche: Sun Life. The announcement about Tangible comes shortly after Sun Life withdrew one of its two products. Tangible is a hybrid long-term care insurance product that offers optional life, critical illness and disability insurance coverage.
In a message shared with its distribution network, the insurer announced that it will no longer accept new sales for the Tangible product line as of October 1, 2021. In addition, only Tangible applications signed before October 1, 2021 and received by October 15, 2021 inclusively will be processed.
Not viable
Sylvain Charbonneau, President and Chief Executive Officer of Canassurance Blue Cross, explained this decision to Insurance Portal. “We are discontinuing sales of the Tangible product because of the lack of interest in this type of product in the Canadian market.” As a result, “we have no reinsurance solution, few distribution partners and very little data for pricing,” he says.
Charbonneau adds that the dearth of other insurers in the long-term care insurance market makes it economically difficult to justify maintaining the product. Canassurance Blue Cross intends to honour all of its commitments to existing long-term care policies, he underlines.
Price increase
However, premium costs will increase, the insurer said in a message to MGAs and advisors. Effective October 1, the cost of facility and home care coverage will rise by 15 per cent. Hybrid disability coverage is going up 25 per cent. Hybrid life, critical illness and loss of autonomy coverage will increase by 10 per cent. The insurer mentions that the initial premium for Tangible long-term care coverage is guaranteed for the first five years of insurance.
Canassurance Blue Cross is also charging more for its Blue Flex and its Accidental Plan disability insurance products. For Blue Flex policies issued prior to June 1, 2016, policyholders will pay an additional 12.5 per cent in disability and overhead expenses. For policies issued on or after June 1, 2021, the increase is 7.5 per cent. For all Blue Flex contracts, the increase is 7.5 per cent for the monthly indemnity and express monthly indemnity. For the Accidental Plan, the increase is 7.5 per cent for disability alone.
Long-term care claims costlier
In an FAQ section, the insurer explains that the increase in disability rates is mainly due to the current economic climate, the prolonged low interest rate environment and the upward trend in disability incidences in recent years.
These three factors are also driving rate increases for Tangible long-term care insurance policies, Canassurance Blue Cross explains. In addition, this product is affected by a fourth driver: Rising claims costs.
