Between 1985 and 1992, over 140,000 Yugos were imported into the United States. The Yugo rarely met emission standards, had an unreliable electrical system, and continually broke down. The joke went:

“Why does the Yugo come with a rear defroster?…..”
“so your hands stay warm when you push it.”  

Needless to say, when Yugo pulled out of the U.S. market, no one was surprised and no one cared. Yugos accounted for less than 1% of auto sales.

Yet the Wall Street Journal described the pending liquidation of Penn Treaty (a small LTC insurance company with about 1% of the market share) as “highlighting the widespread problems that have plagued the industry…for more than a decade.” Nothing could be further from the truth!

It is true that many insurance companies mispriced their long term care policies in the 1990’s and early 2000’s.  Penn Treaty’s mistakes went well beyond mispricing.

Here are the mistakes Penn Treaty made that were in direct conflict with the standards followed by the rest of the long term care insurance industry:  

Those of us specializing in long term care insurance have known this was going to happen for the past 15 years! When you have a company that:

• has below average financial ratings,
• offers policies with richer benefits than the rest of the industry,
• has premiums that are much lower than the rest of the industry, and
• insures applicants the rest of the industry declines,

Common sense says, “this doesn’t add up!” That is why we did NOT recommend Penn Treaty to our clients, even though Consumer Reports ranked it as the #1 long term care insurance policy!