Penn Treaty American Insurance Company has failed, and now Pennsylvania insurance regulators are contemplating what to do with the defunct company. The Pennsylvania department was forced to take over a large block of Conseco polices only a few weeks ago, and now they will assume responsibility for all existing policies that were sold by Penn Treaty American and its subsidiary, American Network Insurance Company.
Penn Treaty American fell victim to the same situation that has plagued so many other long term care insurers—in the quest for market share and growth of sales, their policies were priced too low and the company could not support the policies any longer. The Pennsylvania Insurance Department has done the right thing to step in and take over these policies and protect the consumer, but this will only further shake the faith of consumers in the safety of long term care insurance.
The timing of these events could not be worse. People are becoming more and more responsible for financing their own long term housing and care. Now, people will need to look even harder for reliable mechanisms to finance their needs, and until the long term care industry can clean up this mess, many people will be looking elsewhere. Fortunately, there are other funding solutions for senior living, and people are becoming more aware of these options every day.