Follow-up with internet leads

healthagent · 03-31-2007, 11:47 AM

I don't know if I'm feeling the love with these acquisitions. AMS goes to UHC, Golden Rule goes to UHC, now CGI goes to World.......

What I don't want to see is 5 or 10 years from now 3 "800 pound gorillas" dominate the individual market. They pull in and out of states at will, choose which states to offer good rates, hose the rest of them, and tighten up on underwriting so anyone who's driven past a Rite Aid in the past year is a decline.

I like more, not less competition.

CHUMPS FROM OXFORD · 03-31-2007, 11:55 AM

In addition...these "gorilla" companies will no doubt expand (substantially) their direct-writer field force and Internet presence.

somarco · 03-31-2007, 12:03 PM

Direct writers & internet only are not capturing market share like you would think. Blue might be the exception but in talking with GR a few weeks ago they said 14% of sales comes direct, the remainder is thru their brokerage connection.

An acquaintance is an affiliate for a lead generation firm. He also has a link to eHealth on his site. His conversion on eHealth is less than 1%.

I just don't see direct writers & internet marketers replacing the agent any time soon.

Here in GA Blue is threatening to terminate brokers who do not meet production requirements. This has been tried in other states with no success. If they follow thru on their threat I expect them to come back within a year and say they were only kidding.

healthagent · 03-31-2007, 12:10 PM

When UHC bought Mamsi (huge group carrier in MD - owns half the market) they had an in-house sales force. My buddy Bruce worked for Mamsi at the time and was one of their top in-house agents. Mamsi also gave contracts to brokers. Guess who generated more business - their in-house force or independent brokers? Well....they fired their entire in-house sales force. The independent brokers were clobbering them.

Assurant tried this move about two years ago: put a quoting engine and online app right on the site! Now let's advertise nationally and drive everyone to our in-house sales department! Lol - horrible results. Most adversiting was yanked and now they're drooling over their independent sales force.

CHUMPS FROM OXFORD · 03-31-2007, 02:50 PM

Interesting. Ohio must be different. Plenty of out-of-state brokers wade into the State, but BC advertises big time. Radio, TV, Newspaper and Internet...all directed to their in-house people.

somarco · 03-31-2007, 06:33 PM

BX & KP both do a lot of direct to consumer advertising but still get a significant portion (particularly KP) of their business from brokers.

NHB_MMA · 04-01-2007, 12:18 PM

Originally Posted by CHUMPS FROM OXFORD

In almost every case, the companies mentioned are CGI, United American and ANY discount plans.

We are not allowed to use CGI (not "A" rated), and I tell them that. United American and "discount" plans are also not companies that we use.

I remember Conseco used to be on the list many years ago too.

CGI was a great company at one time, for this market. Ceres absolutely destroyed that company.

NHB_MMA · 04-01-2007, 12:21 PM

I thought World was like B rated or something like that?

somarco · 04-01-2007, 02:55 PM

A-

Upgraded a few years ago about the time they were bought by American Republic.

It really doesn't matter what the company rating is. Don't know why folks get hung up over a B vs. A carrier. Some of the better carriers over the years have been B carriers.

The insurance grave yard is littered with A carriers.

Executive Life
Baldwin United
Mutual Ben

Just to name a few.

CHUMPS FROM OXFORD · 04-01-2007, 03:33 PM

Originally Posted by somarco

A-

Upgraded a few years ago about the time they were bought by American Republic.

It really doesn't matter what the company rating is. Don't know why folks get hung up over a B vs. A carrier. Some of the better carriers over the years have been B carriers.

The insurance grave yard is littered with A carriers.

Executive Life
Baldwin United
Mutual Ben

Just to name a few.

Big difference. The three companies you mentioned were predominantly life insurers. And all three companies had much of their assets either acquired by big insurance companies like MetLife, or their existing contracts guaranteed.

Heath insurance is a different story. Much different. Conseco went bankrupt and much of their existing life and annuity business was still honored. Not the health insurance. They got cancellation letters.

Mutual Benefit shot themselves in the foot with their commercial real estate portfolio. Executive Life must have had about 30%-40% tied up in junk bonds. The kiss of death. And as the public got a whiff of these companies' financial woes, customers started surrendering at a record pace.

When premiums AND assets reduce in a given year...that company may be in trouble, regardless of their rating.

For years, I have been predicting CGI's future. Rates were low, complaint ratios were high and admin costs were not in line with other carriers.

As for the next major health insurer to fall...

somarco · 04-01-2007, 03:48 PM

Yes, they are life companies. So what?

All carriers, even the "big boys" are heavily reinsured. This is especially true in the health market.

I have been in the middle of reinsurance deals with some major carriers in the past, as well as smaller ones. The small, B rated carriers generally do a much better job of managing their portfolio than the gorilla companies.

In the past when Met, MONY, Penn Mutual and others were in the health market they screwed it up royally. Even Aetna did such a poor job they left the individual market entirely for 15+ years before re-entering about 2 years ago. Not convinced they know what they are doing but they have the assets to piss away a few million before deciding to get it or get out.

CGI was never a major carrier but has had some longevity. Their biggest problem was all the private label stuff they got into. Every marketing company with 100 sub-agents could get a deal with CGI. Only one that really made it work were the folks that started QQLink.

When a carrier sells their block (as Ceres did for CGI & CRL) the policy holders transition to the new plan. Same thing happened where Unicare operated and then pulled out (like in GA where they sold their block to BX).

When a carrier pulls out (Mid-South, Mutual of Omaha, Conseco) it becomes a different story. Some folks will end up losing coverage but that has nothing to do with the rating of the carrier.

When MuBen and Baldwin bit the dust folks who had purchased their annuity & investment products (mostly for qualified plans) lost money . . . unless they were willing to wait out the reorganization and take a lesser payout with no loss in principal.

Folks with Conseco life & annuity products did not lose their coverage but had to pay a much higher premium to keep the life in force, or take hits on the annuity biz.

All business is heavily reserved. Health is mostly short tail business and doesn't require much more than 30% or so in reserve. Long tail biz like life & LTD requires a different reserve structure and is less highly leveraged.

And all lines are reinsured at some entry point to protect both the carrier and the policy holder.

CHUMPS FROM OXFORD · 04-01-2007, 04:06 PM

"The small, B rated carriers generally do a much better job of managing their portfolio than the gorilla companies."

Respectfully, my 26 years of experience in the business disgrees with you. As do the rating agencies, since "managing your portfolio" is ironically part of the ratings equation.

Some of what you said about taking hits on the annuity business was true. Some wasn't. Baldwin was paying 1%-3% higher payouts on their annuities than anybody else. They went under. Most of their contracts were honored at ABOVE-MARKET rates. I can tell you that first-hand.

I agree that Met and MONY (and some others) weren't the greatest with their individual health blocs of business. And you have made my points.

A life policy or annuity with a lower rated company has some built in protection. With individual health...a company can one day pack their bags (big company or small)...and you're out a policy.

That was my point.

somarco · 04-01-2007, 06:25 PM

Then we agree on some points and disagree on others.

Baldwin, Exec, MuBen were all A rated companies that did a poor job of managing their portfolio.

Met, MONY, MoO & others were A rated companies that did a poor job of managing their health insurance blocks.

So I guess one can say that a high rating means nothing when it comes to predicting success for a line of business.

06-16-2008, 06:10 PM

Hello everyone! I am new to the board . Any suggestions on how to grow your business? Where are good leads available? What is easier to sell life or health?

Gary