LTC: Provider assessing its options as the only player left in dwindling market
Speculation that Skandia is about to pull out of the pre-funded long term care (LTC) market is rife, despite claims from the provider that it is yet to decide on its future.
Skandia has revealed that it is assessing the ramifications of being the sole provider in the market and as a result, is currently undergoing a cost benefit analysis to determine its future stance on the issue. It expects to make an announcement within the next four weeks.
"The market's future needs careful consideration," said Shelley Robertson, protection brand manager at Skandia.
"As the only player left in the pre-funded sector, we are taking a serious stance on the viability of remaining in the market. While we could stand to profit from taking all the risk, we stand to make a loss as well."
Following AXA Lifetime Care's decision to withdraw from the market at the end of 2003, the handful of remaining providers were confident that it did not sound the death toll for the market. However, Norwich Union followed soon after, and BUPA also pulled out of the dwindling sector last month.
While the need for a LTC pre-funded product remains, the number of sales and the risk associated with being the sole provider suggests that it may not be worthwhile for Skandia to remain in the market.
Graham Fidoe, chairman of IFACare, said the news that Skandia is assessing its position comes as no shock to advisers.
"I wouldn't be too surprised if Skandia decided to withdraw from the pre-funded long term care market in light of what is happening in the sector. However, the diminishing number of providers is a great disappointment for the industry as the need is there and will only increase over a period of time," Fidoe said.
While Skandia also acknowledged the need for a LTC product, it admitted that low sales figures show it is a small and stagnant market, with sales standing at around 1,200 in 2003 according to statistics from the Association of British Insurers.
"Skandia is committed to the long term care market, whether pre-funded or otherwise. If we do decide to pull out, there would be no pre-funded options available and this is what we are currently working through," said Robertson.
