Actuarial Challenges in Pricing Long-Term Care Insurance Products for Nigeria’s Ageing Population

This study examines the actuarial challenges in pricing long-term care insurance products for Nigeria's ageing population, as demographic shifts gradually increase the proportion of older adults requiring chronic care support. While Nigeria remains a relatively young country, the absolute number of adults aged 60 and above is growing rapidly, and traditional family-based care models are increasingly strained by urbanization and lifestyle changes. Long-term care insurance, which covers the cost of assistance with activities of daily living arising from disability or cognitive impairment in old age, is virtually absent from Nigeria's insurance market but presents a future growth opportunity. This study uses disability and dependency prevalence data from the National Survey on Disability, healthcare cost data from geriatric units in university teaching hospitals in Lagos, Enugu, and Kaduna, and international long-term care insurance experience data from the Society of Actuaries. A multi-state LTC model is developed using Nigerian-adapted transition intensities covering active, mild dependency, severe dependency, and dead states. Illustrative premium rates are computed for entry ages 45, 50, and 55. Findings reveal that data scarcity in the Nigerian elderly morbidity space is the primary actuarial challenge, necessitating heavy reliance on international proxies. Lapse and interest rate assumptions have the largest impact on premium rate sensitivity. The study concludes that long-term care insurance is technically priceable in Nigeria but requires investment in local elder morbidity research. It recommends a collaborative industry-government initiative to develop Nigerian LTC morbidity tables.

Keywords: long-term care insurance, ageing population, multi-state model, morbidity, actuarial pricing.