Issuance Decisions and Strategic Focus: The Case of Long-Term Care Insurance


  • The authors thank Etti Baranoff, Andre Liebenberg, Walt Mayer, Kathleen McCullough, two anonymous reviewers, and the associate editor for their helpful comments on previous versions of this research.


Increasing costs of long-term care are placing ever greater burdens on state and federal budgets, yet private long-term care insurance remains a relatively minor financing vehicle. Although many researchers provide rationales for the limited private market, some life–health insurers have forged ahead into this relatively new and risky line of business. We investigate what makes these insurers different and whether managers are following a diversification or strategic focus strategy. We find that strategic focus is a consistently important factor and that managers' participation and volume decisions are made independently.