Long-term care insurance research and trajectory
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Long‑term care insurance research and trajectory Joan Costa‑Font1 · Christophe Courbage2 · Joël Wagner3,4
© The Geneva Association 2019
The financial risk of facing the costs associated with future needs for long-term care (LTC)—i.e., care for people dependent on help with their daily living activities—is still largely underinsured. In fact, the cost of LTC can even be catastrophic, resulting in ruin for a number of elderly people and their families. Financing LTC risk is therefore becoming a pressing issue for many countries confronted with an ageing population and growing LTC needs (see, e.g., Fuino and Wagner 2018b). This special issue of The Geneva Papers on Risk and Insurance is devoted to the role of insurance in financing LTC, and addresses three topics in particular: the reasons for a limited development of LTC insurance markets, the effect of LTC insurance purchase on the financial well-being of individuals, and the major research areas, both current and future, in the field of LTC insurance. While LTC is mainly financed by governments through different types of public programmes, the limited level of public coverage, which is often means- or needstested, as well as increasing budgetary constraints have prompted a move towards developing insurance designs that address the specific institutional constraints of each country (Costa-Font et al. 2015). However, so far the market size for the different LTC insurance schemes has been relatively small in comparison to the very substantial amount of private expenditure and the significant level of self-insurance by families (Costa-Font 2010). The slow insurance development can be accounted for by a number of supply and demand factors, some of which this special issue discusses and advances in its study. Such supply factors include questions associated with risk insurability, asymmetric information and pricing (Fuino and Wagner 2018a). As for demand factors, potential cognitive biases in risk perception, awareness of caregiving needs and the burden on family (Sloan and Norton 1997), and
* Christophe Courbage [email protected] 1
London School of Economics, London, England, UK
2
Geneva School of Business Administration (HES-SO), Geneva, Switzerland
3
Department of Actuarial Science, Faculty of Business and Economics, University of Lausanne, Lausanne, Switzerland
4
Swiss Finance Institute, University of Lausanne, Lausanne, Switzerland
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more especially the crowding out of public assistance (Brown and Finkelstein 2008) and of family support (Pauly 1990) are relevant drivers. The first set of papers published in this special issue investigate further those demand-side factors that could explain why the LTC insurance market is limited in size, focusing on LTC risk perception and family altruism. The paper by Martin Boyer, Philippe De Donder, Claude Fluet, Marie-Louise Leroux and Pierre-Carl Michaud reports survey evidence on LTC risk misperceptions and demand for LTC insurance in Canada. To assess LTC ris
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