Description: The objectives of this paper include an assessment of the basis of volatility of experience and financial results, considering the risks and uncertainties associated with long-term policies, especially LTCi. In so doing, it is observed that a properly determined provision for risk and uncertainty is needed in premiums and reserves. It then describes the approaches that can be taken to quantify such a provision in new and re-rated LTCi. The paper discusses possible mitigation approaches that have and should be taken, especially but not limited to the use of policy design features to enhance the alignment of interests of the LTC insurer and its policyholders. It also explores the relationship between historical and expected future risks and uncertainties specific to LTCi. It concludes by pointing out the pervasiveness of the uncertainties involved, the earlier underestimation of the uncertainties involved, although the actual degree of uncertainty may have decreased over time as relevant experience has been obtained. Effective management of LTCi demands incorporation of mitigation approaches in its product design and continuous monitoring of relevant experience.

Description: The author discusses her time working in LTCI and how her views regarding the effect of volatility and uncertainty have evolved over this time.