GE has a LTC Problem and InsurTech can Help

An accounting expert who raised red flags about Bernie Madoff’s Ponzi scheme has a new target: General Electric Co.

General Electric's stock took a beating after the release of a report published by investigator Harry Markopolos claiming the company has been misleading investors. He accused GE last Thursday of engaging in accounting fraud worth $38 billion. He said GE is heading for bankruptcy and is hiding $29 billion in long-term care losses. To prove GE’s fraud his team located the 8 largest Long-Term Care (LTC) insurance deals that GE is a counter- party to, accounting for, according to them, approximately 95% or more of GE’s exposure. These deals were with:

  • Allianz

  • AUL RE

  • John Alden

  • Lincoln Benefit

  • Mass Mutual

  • State Life

  • Westport

The report also stated why LTC turned into a money losing business over time:

  • Complex product

  • Relatively new product (in 1970)

  • Wrong assumptions

  • High policy holder retention rate

  • lapse rate much lower than expected

  • Lower interest rate

  • More claims than forecast

  • High incidence of Alzheimers

  • Non-uniformity of reserving practices

  • Healthcare costs rising higher than expected

  • Tough to get rate increases

As the first InsurTech telematics product in LTC, SafeLights from CareValidate can help GE and other LTC's providers who are in a similar bind. SafeLights are known to reduce claims and increase senior safety. Insurance companies that need to reforge their relationships with their insureds are using InsurTech in almost all insurance verticals and LTC is no exception. This is because today's consumers expect more from their insurers. They gravitate to companies that don't just hope that there will be no claims but actually provide consumers the tools that prevent adverse events. InsurTech also helps insurers create more loyal and direct relationships with their insureds that are based on a foundation of trust created upon real world data.

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