Long term care specialist, Owain Wright , talks to Angela Faherty about the growth potential in the market and the need to implement change
Owain Wright has been working in the long term care (LTC) market for several years. As head of specialist advisory firm, The Care Funding Bureau, Wright has high hopes the market will begin gaining some headway in the near future.
Recently, the LTC market has virtually ground to a halt. While the immediate needs annuity side of the business has grown, sales of pre-funded policies have been at an all-time low and some industry commentators have begun to question the future of the sector.
But Wright is confident the LTC sector has strong growth potential. "There will always be a need for pre-funded policies. People need to have the option, but it is going to take a huge mind shift for the pre-funded sector to grow. The market as a whole holds a wealth of potential. It is a case of educating people," he says.
One of the main problems with the LTC market, says Wright, is the negative connotations many associate with it. "The majority of customers will not consider long term care because it is a bad news story – spending money on something they do not want to consider. It is a short step away from considering death and as a nation, we just do not think like that.
"People will go to great extremes to ensure they get an extra quarter per cent on their savings plan, but give no thought to what is a one-in-three chance they will need to pay out £25,000 a year for their care needs in a few years' time," he says.
While Wright admits it will take a long time to change the misconceptions people may hold about the market, or simply make them aware it exists, the solution lies in educating people about the need for planning care and the availability of specialist advice. As with most problems, however, putting the plan into practice is far from simple.
"Advisers across the protection market need to ensure when they are making provisions for their client's retirement they broach the subject of long term care. But the problem is that those advisers who are not specialists in the long term care field will not raise awareness as they are not comfortable with their own knowledge of the market. Similarly, many customers feel uncomfortable about the subject and are unlikely to want to talk about it," he says.
Wright hopes Financial Services Authority (FSA) regulation of the LTC market in 2004 will help to raise awareness of the product and the sector as a whole among advisers and customers. "Hopefully, regulation will make advisers sit up and think they should be doing something about long term care, either themselves or by referring to a third party they know and trust. I hope it makes people more pro-active," he says.
While it is unlikely any new providers will enter the LTC sector any time soon, Wright feels the market is calling out for innovation. However, he adds many providers are reluctant to enter a market they consider to be, at this time, too challenging and unrewarding.
"We could do with some new players, but I cannot see it happening soon. Many providers have sat on the sidelines and looked at the experiences of those in the market, and have perceived their yield to be fairly low. They cannot see it is working and they do not know what they can do that will be any different," he says.
To help get the market moving, Wright cites a recent report – which proposed a mandatory LTC scheme – as a possible solution. But even this has potential shortfalls. It suggested a Government initiative in which everyone above a certain age would have to contribute a set amount a week to a compulsory scheme. However, Wright feels this could prove costly. "Nearly everybody in the country would contribute and it would still be £45 a week. It brings home just how expensive long term care can be," he says.
Another suggestion he proposes is greater public and private interaction. It is in this case that Wright feels relations can improve. He feels Social Services and the private sector should be working together to help promote awareness of the need to consider long term care.
"Social Services should want to work hand in hand with companies such as ourselves because we are helping their clients and to a certain extent, although not in every case, protecting their budgets," he says.
Wright also feels certain issues within the LTC market remain unresolved and putting these right is imperative if the market stands a chance of future development.
"There needs to be a national standard as to what constitutes Continuing Care. This continues to be a problem and there is a need to quantify the eligibility criteria for Continuing Care. Some noise was made about this a while ago, but the market has already gone quiet on the issue," Wright says.
Wright is adamant the market can grow, but accepts certain changes in the LTC sector are required before any real developments will be seen. He is however, keen to ensure LTC gets the attention it needs to move forward. "My main goal is to grow the awareness of the problems facing the long term care market and to help address these issues as well as bring the sector and the fact that there is somewhere to go for specialist advice to the forefront of people's minds," he says.
