A Long-Term Bet Gone Bust
Last week, General Electric said it was taking a massive loss — $6.2 billion — related to an obscure corner of the company: long-term-care insurance.
Long-term-care insurance is this kind of insurance that anyone can buy. It covers things like nursing home care, or a home health aide.
But recently, GE came out and said it was having an "adverse claims experience" with these policies. Basically, the company got the math wrong, and lost billions as a result.
This isn't just about GE. MetLife got out of this business and so has just about everybody else. They all said the same thing: we underestimated how much this was going to cost.
Today on the show: How did the insurance companies get the numbers so wrong? And why can't they get it right?
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