Long-term care insurance premiums set to rise

Dorit Salinger photo: Tamar Matzafi

The increase is likely to be particularly steep for older people.

Capital Markets, Insurance and Savings Authority head Dorit Salinger has stated more than once since taking up her position that lowering the cost of insurance and savings is of supreme importance to her. She can point to several successes, for example in pensions. Analysis of long-term care insurance, however, shows that its cost has been rising by more than 6% a year.

The two health funds involved are Maccabi Health Services, whose policies are from Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), and Clalit Health Services, whose policies are from Harel Insurance Investments and Financial Services Ltd. (TASE: HARL). In both policies, launched in July, the current insurance period is until the end of 2018, and the insurance premiums are linked to the Consumer Price Index. The premiums tables for the policies list the expected premiums until 2031 according to the policyholder's age. The price rises they show are uncertain as of now, but they give an indication of what is expected, and also reveal what the regulator regards  as a "normal" price rise in long-term care insurance - a floor rate for the necessary price rises. The figures we gathered show that the annual rise in real terms averages much more than 4%. By 2031, the cumulative increase will be 82% in Maccabi and 91% in Clalit. In other words, there will be a constant real rise, especially for older people, who are already suffering from health problems, and are "locked into" the insurance they already have. In Maccabi, the highest rate of increase is in the 26-29 and 56-70 age groups - 5-6% annually. In Clalit, the highest rate of increase is in the 46-80 age group - over 5% a year in 2017-2031, with a maximum annual increase of 6.9%.

Published by Globes [online], Israel Business News - www.globes-online.com - on October 9, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Dorit Salinger photo: Tamar Matzafi
Dorit Salinger photo: Tamar Matzafi
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