Insurance company Conseco transferred many of its long-term care policies to a trust because of the enormous costs associated with supporting these policies, according to a news report.
Conseco moved the policies to Senior Health Insurance of Pennsylvania, a new state-supervised, not-for-profit trust. The move will affect more than 140,000 Conseco beneficiaries. The policies bogged down company earnings because they were under-priced and required capital infusions to meet the needs of the policyholders, according to The Wall Street Journal. But the trust is in danger of becoming insolvent, the story reports. If that becomes the case, state guaranty agencies would be required to pay out claims, but limits set by state law would apply.
The move to transfer the policies could spur similar actions from other insurers. It is significant because long-term care insurance is seen by many as part of a financing solution to the long-term care crisis.