Regulatory Barriers

Although insurance companies face some regulatory obstacles to developing and selling long- term care insurance, regulation is not a major impediment to growth. Long- term care insurance is typically regulated by state insurance departments under provisions for other types of insurance such as medicare supplemental, general medical, and disability insurance. The problem for state insurance regulators is how to strike a balance between protecting consumers and nurturing a new product. Proponents of regulation fear that if tough regulations are not imposed, consumers will not be protected against inferior products and fraud. They recall the scandals that resulted from the federal government's failure to set minimum standards for medicare supplemental insurance policies. Opponents of strict regulation argue that officials do not have enough information or experience to regulate intelligently and that flexibility is needed to prevent financial losses that may discourage the insurance industry.