Mistake

General Electric is taking a $6.2 billion charge against earnings to cover shortfalls in its long-term care insurance portfolio. It is not the only company that has done that. One insurer after another has had to increase premiums to cover unanticipated costs. As a result, long-term care insurance has a bad reputation for being expensive and unreliable. One wonders why anyone would buy it except that aging can impoverish one with charges for home, medical and other care. It isn’t much consolation for GE to know that it has joined the club, especially since the company is doing poorly in its other businesses as well. Maybe at some point, insurers will get their actuarial assumptions right, but that day hasn’t arrived yet.