ERM-526-19: The Risk of Pricing New Insurance Products: The Case of Long-Term Care


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Reading Source: https://www.chicagofed.org/publications/chicago-fed-letter/2018/397

Topics Covered in this Reading:

  • What is long-term care?
  • How does LTC work?
  • How do insurers price LTC insurance?
  • Which of the LTC insurance pricing assumptions wound up missing the mark?
  • The Penn Treaty insolvency
  • Guaranty funds
  • What were the consequences?
  • Concluding comments