Untapped Insurance Market. I Need Startup Info

[sunnyskies]

Can anyone tell me how STD insurers make a profit? I've got a business idea and would like someone experienced to help me determine if they think I could turn it into a viable insurance company. I am being intentionally vague here to protect my idea. I believe there is an untapped STD market out there and I'd like to build a start-up business around it.

Can someone experienced with the STD insurance business model please contact me at my yahoo email address: therese44 (at yahoodotcom)

Thanks

 

[somarco]

Re: Untapped Insurance Market--need Start-up Info

Not really sure what you are asking, but here goes.

STD coverage is offered on a group basis. I saw an individual plan a few years ago by a very small carrier. That plan was pulled within 2 years, probably due to losses.

STD carriers limit benefits to 13 or 26 weeks in most cases. STD benefits are offset by WC benefits. STD benefits usually do not kick in until 14 days of disability but you can buy benefits starting on the 8th day and 1st day for accident or hospital admission.

STD benefits usually come in $100 increments and are usually capped at $500 although some plans will go higher. Benefits are designed to reimburse up to 50% of gross pay. STD benefits come in non-occ and 24 hour flavors.

Most occupations are eligible, but some of the high risk occs may not qualify or may only be available on a non-occ basis.

I would be surprised if anyone comes up with a viable market that has not been tapped, or tried and failed.

 

[sunnyskies]

Re: Untapped Insurance Market--need Start-up Info

Thanks for the response. After more research, I'm seeing that this would be hard to do.

My idea centers around families that want to have a parent stay home after a child is born and offer things that mothers need in the first year outside of typical insurance. It's been my experience that some moms these days decide they want to stay home with their children (after they arrive) but they did not plan for this financially. It's also very discouraging that most existing insurance policies lack sufficient post-birth care for women. The fact that childbirth essentially amounts to disability in the insurance world proves that the business community doesn't see potential profits from women in the workforce of child-bearing age, hence my thinking this could be an untapped market.

Insurance may not be the best route here because I see more pay-outs than the income would sustain. This is why I was wondering how SDI is profitable at all. I'm considering other business avenues in this direction. You've been helpful.

Thank you for your time.

 

[somarco]

You will probably disagree, but childbirth (absent complications) is not a disability. Many (most?) women who opt to stay home after delivery are not disabled but rather simply changed their mind. PPD is a real condition, but most get over it in short order.

Situational depression from the loss of a spouse, child, job, divorce, etc. is also real but is something that most people recover from over time.

There are (or were) disability policies for SAHM's that paid a nominal amount should the non-working spouse become disabled. Amounts were usually capped in the $500 - $800 per month range and only covered "accepted" disabilities.

Childbirth is not one of them . . .

The challenge to your proposal lies in the following.

families that want to have a parent stay home after a child is born and offer things that mothers need in the first year outside of typical insurance.

I don't know of any carrier that will insure a voluntary risk, or for that matter, any Vegas bookie that will take that bet.

Good luck.

 

[HealthGuy]

I had heard that Illinois Mutual already has a STD product that is guaranteed issue for small groups that does cover for a short time absence at work due to pregnancy.

 

[somarco]

Many group STD and WSM plans have a nominal maternity benefit. Some will pay for 6 weeks, others for up to 12 weeks. Most (if not all) have waiting periods. You can only sign up during open enrollment and cannot be pregnant at the time.

You would be amazed at how much abuse there is under this kind of benefit, even with the limitations.

 

[The DI Doctor]

I work with two types of STD products (As well as LTC, CI, long term DI, etc.). The main one is a low cost way of getting a small benefit into the hands of many, and the other is unique in the fact that you can write individual cases with it. You can use these strategically in dovetailing or supplementing coverage. Perhaps we can communicate on the subject without actually discussing your idea. I will send you an email.
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I just read your reply to Sunnyskies, and you are absolutely right. There are no financial products that I know of, especially in disability, that would help in pregnancy and childbirth as it is considered a normal function of life. (Disability only helps with complications of birth.) I hope my comments were helpful.

 

[rsli-moses]

Thought I would throw my two cents in since I wholesell group STD.

For Reliance (and your other top ten group disability companies) Short Term Disability is a very unprofitable product. In fact, underwriters frown upon selling it on a standalone basis.

For a standard pregnancy, we pay a flat 6 weeks. For a cesarean we pay 8 weeks.

If the employer is paying 100% of the premium and participation is 100%, then there are no pre-existing condition limitations. Waiting periods are completely up to the broker and employer and have no rating impact. Note that elimination period and waiting periods are two different things.

Short term disability is just an alternative to a 3/6/9/12 month emergency savings account that everybody should have anyway. On an importance scale, I think it ranks up there with vision insurance (our most profitable product, obviously).