Actuaries Club of the Southwest Southeastern Actuaries ... · sales results, despite continued...
Transcript of Actuaries Club of the Southwest Southeastern Actuaries ... · sales results, despite continued...
Actuaries Club of the SouthwestSoutheastern Actuaries Conference
Worksite Products in Today’s Market
November 16, 2011,
Presented by:yMilliman, Inc.
Tampa, FLTampa, FL
Outline• Overview of the Worksite Market
Michael Weilant, FSA, MAAA
• Life Worksite Products: What's Working• Life Worksite Products: What s WorkingSanjeev Chaudhuri, FSA, MAAA
• Critical Illness: A Core Product in Today's PortfolioJ if (O'B i ) H d ASAJennifer (O'Brien) Howard, ASA
• Accident Insurance: An Essential Product Nate Sandrowicz, ASA
• Short Term Disability: Where is it Headed? Joshua Weber, FSA, MAAA
• Limited Benefit Medical: PPACA is a Game Changer Darrell Spell, FSA, MAAA
• Reinsurance: Small Coverage Providing Big Value
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Reinsurance: Small Coverage Providing Big Value Clark Himmelberger, FSA, MAAA
Important NoticeThe information in this presentation is general in nature. It is
t i t d d t t th ti ti f
Important Notice
not intended to represent the actions or assumptions of aspecific company and the information is not appropriate forpricing, reserving, reviewing, or performing any other functionspecific to a single carrierspecific to a single carrier.
This presentation was prepared for the specific purpose ofThis presentation was prepared for the specific purpose ofproviding a general overview of the worksite market andproducts typically sold in that market. It is not appropriate forany other purpose. Milliman does not intend to benefit any thirdy p p yparty recipient of its work product.
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Characteristics of Worksite InsuranceCharacteristics of Worksite Insurance Life and health insurance products
Sold at the worksite
100% employee paid through payroll deduction
Can be filed on an individual on group chassischassis
Can be called “worksite” or “voluntary”
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y
November 17, 2011
Worksite New Business Annualized PremiumWorksite New Business Annualized Premium(in $ billions)
$6.0
4.0 4.1 4.24.4
4.75.0
5.25.4
5.2
$5.0
2 2
2.6
3.1
3.5
$3.0
$4.0
2.02.2
$1.0
$2.0
$0.01997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Eastbridge Consulting
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g g
Worksite Takeovers as % of New %Business Premium
45%
38%
41%
35%
40%
29%
20%
25%
30%
12%
17%
10%
15%
0%
0%
5%
2006 2007 2008 2009 2010
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Source: Eastbridge Consulting
Worksite In Force PremiumWorksite In Force Premium(in $ billions)
$30 0
19 520.7
22.924.7 24.6
$25.0
$30.0
Low Estimate High Estimate
13 414.8
15.717.4
18.8 18.7
10 3
13.315.0
16.617.7
19.5
$15.0
$20.0
5.2 5.86.7 7.3
8.510.0
11.312.5
13.4
6.27.0
8.08.8
10.3
$5.0
$10.0
Source: Eastbridge Consulting
$0.01997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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g g
Worksite Market Share byWorksite Market Share by Distribution Type
2%9%
Benefit Brokers
52%
15%Career Agents
Classics52%
Specialists
23% Occassional
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Source: Eastbridge Consulting
Worksite Group vs IndividualWorksite Group vs. Individual Products
100%
59% 58% 57% 57% 57% 54% 52% 51% 50%70%
80%
90%
59% 58% 5 % 5 % 5 %
50%
60%
70%
Individual
Group
41% 42% 43% 43% 43% 46% 48% 49% 50%20%
30%
40%Group
0%
10%
2002 2003 2004 2005 2006 2007 2008 2009 2010
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Source: Eastbridge Consulting
Worksite Mix of Sales by Product LineWorksite Mix of Sales by Product Line8%
25%10% Life
DI
HI/Supp Med
12%
HI/Supp Med
Cancer/CI
Accident
20%12%
Dental
Other
Source: Eastbridge Consulting
13%
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g g
AflacAflac “With about 90% of our accounts being small businesses with fewer
than 100 employees, our primary market is the slice of America than 100 employees, our primary market is the slice of America that’s been hit the hardest by the economic turmoil over the last two years. As such, we were challenged in our U.S. sales growth…”Source: Aflac 2010 Year In Review
“We were also pleased that Aflac U.S. continued to generate strong sales results, despite continued weakness in the U.S. economy…On the product side, sales have benefited significantly from the addition of group products to our Aflac U.S. product portfolio and strategic, coordinated sales and marketing efforts. On the distribution side, Aflac U.S. has continued to generate significant recruiting gains, which we believe benefited from targeted activities that promote the Aflac sales opportunity.”
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Source: Aflac 2011 Quarterly Report, Third Quarter
November 17, 2011
Allstate BenefitsAllstate Benefits
“Allstate Benefits continued to grow, with premiums increasing 33% in 2010, putting us in the number two market share position in the U.S. workplace voluntary benefits.”
“To fulfill its purpose, Allstate Financial’s primary objectives are to…dramatically expand Allstate Benefits (our workplace distribution business)…”business)…
“Total premiums and contract charges increased 10.7% in 2010 d t 2009 i il d t hi h l f id t d h lthcompared to 2009 primarily due to higher sales of accident and health
insurance through Allstate Benefits, with a significant portion of the increase resulting from sales to employees of one large company…”
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Source: Allstate 2010 Annual Report
Unum / ColonialUnum / Colonial Market Share: 2nd in voluntary insurance
S htt // /Ab tU /Source: http://unum.com/AboutUs/
2010 2009 2008 2007Unum US Voluntary Benefits Segment - Benefit Ratios 55.1% 56.0% 58.0% 60.1%
“D i 2011 i h b d l i
Colonial Life Segment - Benefit Ratios 49.7% 47.3% 47.5% 48.3%Colonial Life Segment - Before-Tax Operating Ratios 26.2% 27.7% 27.4% 27.1%Source: Unum 2009 & 2010 Annual Reports
“During 2011, we expect premium growth to be modest relative to our long-term outlook. We believe that strong profit margins will continue, although we expect our overall benefit ratio to be slightly higher…We b li i th ill l t th i dbelieve premium growth will reaccelerate as the economy improves and employment growth resumes”Source: Unum 2010 Annual Report – Colonial Life – Segment Outlook
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Market SizeMarket SizeBureau of Labor Statistics, October 2011
Establishment Survey Data (private sector)
– Number of employees: 109.5 millionp y
– Average weekly hours: 34.4
A h l i $23 2– Average hourly earnings: $23.2
– Average weekly earnings: $795.42
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Worksite Life Product PortfolioWorksite Life Product Portfolio Term Whole Life Excess Interest Whole Life Universal Life ART/YRT ROP Term Supplement to Group Life
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New Business Premiums
5 406.00
3 504.03 4.10 4.22 4.37
4.725.04 5.23 5.40 5.24
4.00
5.00
3.103.50
1 332.00
3.00
0.66 0.77 0.89 1.09 0.98 1.04 1.01 0.95 1.15 1.31 1.33
0.00
1.00
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10Worksite - Total Worksite - Life
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Source: Eastbridge US Worksite Study
New Business Premiums: Term v.s. UL/WL
0 941 00
0 65 0 65
0.78
0.94 0.93
0 700.800.901.00
0 330.44
0.59 0.570.65 0.65
0.60
0 400.500.600.70
0.33
0.45 0.45 0.50 0.41 0.40 0.37 0.36 0.37 0.37 0.400.100.200.300.40
0.00'01 '02 '03 '04 '05 '06 '07 '08 '09 '10
Worksite - Term Worksite - UL/WL
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Source: Eastbridge US Worksite Study
Worksite PersistencyWorksite Persistency Types of Lapse Other Considerations
– Normal Lapses– Group Lapses
– Product– Group Sizep p
– Job Change Lapsesp
– Market– Industry
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Worksite Mortality AssumptionsWorksite Mortality Assumptions
Market penetration CompetitorspParticipation within
groups
p Issue limitsPersistencygroups
DemographicsAge/Gender
Persistency Level of underwriting
Age/Gender
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Worksite UnderwritingWorksite UnderwritingActively at work Limited Enrollment PeriodParticipationParticipationUnderwriting Questions
Polic and Case Si ePolicy and Case Size Industry
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Worksite UnderwritingWorksite UnderwritingActively at work
– Minimum number of hours per week required
Limited Enrollment Period Limited Enrollment Period– Two to three weeks typically
Participation– Industry standard is 20%– May waive for preferred enrollers
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Worksite UnderwritinggEffect of Participation
Guaranteed Issue Participationqx % 100% 20%
Declines 2000% 25 10Declines 2000% 25 10Substandard 300% 150 50Standard 100% 825 140
Total 1 000 200Total 1,000 200Avg class 178% 245%Avg table 3 6% td 82 5% 70 0%% std 82.5% 70.0%
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Worksite UnderwritingWorksite UnderwritingUnderwriting Questions
Simplified underwriting– Simplified underwriting– Knock-out questions
Policy and Case Size– Policy maximums and minimiums– Guarantee Issue maximums– Larger the case sizes the better
Industry– Unacceptable and non-standard industries
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Unacceptable and non standard industries
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ExpensesExpenses Lower underwriting & issue expenses
Commission structures
Cost of policy maintenance
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Experience ManagementExperience ManagementMortality study
Persistency study
Expense study
S l d k ti l iSales and marketing analysis
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Critical Illness - A Brief OverviewC t ca ess e O e eA “Typical” Critical Illness Policy
$ Cancer (optional)$ if Heart Attack
St kLumpSum
Stroke
Kidney Failure
Major Organ Transplant
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Critical Illness - A Brief Overview
Lump Sum Benefits are “Free” Cash
$Medical ExpensesExperimental T t t$ Can Be
Used
Treatment
Travel
LumpSum
for... Debt Restructure
Specific Expenses
Other
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Possible Benefit Options$ Full benefits payable for
additional illnesses• Paralysis• Blindness• Occupational HIV
$ Partial benefits for less severe conditions• CABG - 25%• Carcinoma in situ - 25%• Alzheimers - 25%• Parkinsons - 25%
• Wellness Benefit - $50$
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Wellness Benefit - $50$
Keys to Success in Worksite MarketKeys to Success in Worksite Market
Keep product offerings simple
Take a “portfolio view” of your product design
Address specific needs of your (multiple) clientsclients
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Keep Product Offerings SimpleKeep Product Offerings Simple
Don’t try to include everything
58 Conditions
Multiple Payment Options
Extensive $$ Options
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Keep Product Offerings SimpleKeep Product Offerings Simple
Avoid design features that only a genius can understand
Expansive Severity Levels
Illogical Definitions
Complex Triggers
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Illogical Definitions
T k P tf li Vi f YTake a Portfolio View of Your Product Design
Be certain that your product design does not “clash” with other product’s featuresclash with other product s features.
Cancer Disabilit
Remember some things just don’t go together
Cancer Disability
Remember…some things just don t go together very well!
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Critical Illness Design ConsiderationsThree “Key” Types of Customers:
BuyersyBusiness ownerHR DirectorEmployeep yEmployee’s spouse
Sellers (Agents)CommissionCommissionAcquisition expensesClaims expenses
ManagementManagementProfitRisk
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Environment for Growth in U S ?Environment for Growth in U.S.?
Key Statistic
S Ob ti
Key Statistic– Near doubling of in force count in 2010
Some Observations– Increased interest by HR leaders
G i b di t ib t– Growing awareness by distributors– Lessons learned from previous market entry
failuresfailures– Improved product design consideration– Interest increased due to PPACA
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Key Current Marketers in USKey Current Marketers in US Aetna Allstate Workplace Division
Guardian Life HM Life Insurancep
American Fidelity Assurant Employee Benefits
John Hancock Kanawha / Humana
Colonial Life and Accident Combined Insurance Co. Conseco
Lincoln Financial Starmount Life Symetra Conseco
Continental American Dearborn National
Symetra Transamerica Trustmark
Fairmont Specialty Group Great American
United Healthcare UNUM/Provident
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Three Approaches to CIThree Approaches to CI
Stand-Alone Policy
Accelerated Rider to Life Policy
Combination Product
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Stand Alone PolicyStand Alone Policy
Very flexible Very flexible
Attractive risk features
Best approach for several key markets
E i t i Easier to price
More expensive (e.g. more benefits)
Regulatory obstacles
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Flexible Product DesignFlexible Product Design(stand alone)
Contract can be sold alone or packaged with other coverage
Contract can be “removed” alone
Only covers critical illnessy
Benefits can be tailored to the needs of target market.
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More ExpensiveMore Expensive(stand alone)
N ff t f lif i b fit No offset for life insurance benefits
Usually (but not always) assume “supplemental health insurance” style underwritinghealth insurance style underwriting– Simpler
Less selective– Less selective
Policy expenses vs. lower rider expense
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Accelerated Rider to Life PolicyAccelerated Rider to Life Policy
Best approach for coordinating with life coverpp g
Eliminates “survival period” issue
Limited by base policy Limited by base policy
Best approach for “high-end” market
More difficult to price (offset for coordination with life)
Less expensive (e.g. less benefits)
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Typical Primary Worksite Triggers
Heart Attack
Stroke
Cancer
Renal Failure
Major Organ Transplant
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Typical Secondary Worksite TriggersTypical Secondary Worksite Triggers CABG (25%)
B Burns
Cancer in situ (25%)
Blindness/Deafness/Paralysis Blindness/Deafness/Paralysis
Brain Tumor
Occupational HIV Occupational HIV
Parkinsons (25%)
ComaComa
Alzheimers (25%)
Wellness ($50, $75, or $100)
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Wellness ($50, $75, or $100)
November 17, 2011
P t ti l R ti V i blPotential Rating Variables Plan DesignPlan Design
Age (or composite rate)
Family Tier Family Tier
Tobacco Status
Occupation Occupation
Employer contribution
G d Gender
Area
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Risk CharacteristicsRisk Characteristics
Some “Disease Diversification”Some “Disease Diversification”
Average morbidity by 4 primary diseasesAverage morbidity by 4 primary diseases
Cancer
Heart Attack
Stroke
Kidney Failure
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L R tLapse Rate
Similar to other worksite products.
S t b tt i t *Some report better persistency.*
*Worksite Critical Illness Products 2005Eastbridge Consulting Group
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Eastbridge Consulting Group
Limited Data SourcesLimited Data Sources
G d i d li d t i t i Good insured lives data in some countries (U.K., Australia, Canada, South Africa)
Population data is available in most countries
Data in one country not transferable to another (without adjustment)( j )
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Data SourcesData Sources American Heart Association (heart attack / stroke)
Surveillance Epidemiology and End Results (SEER)
United States Renal Disease System United States Renal Disease System
United Network for Organ Sharing
State hospital databases
Medstat, HCGs databases
52 November 17, 2011
Anti selection ProtectionAnti-selection Protection
Eligibility Criteria Eligibility Criteria- Actively at work- Employed 90 days
Survival Period –- none
Pre-ex PeriodPre ex Period- Standard Pre-ex – 12/12
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Underwriting Guaranteed IssueUnderwriting – Guaranteed Issue Personal Health
- tobacco use (smoker / non-smoker rating)
Financial Limits- Generally limited: $10,000, $15,000 or $20,000
Participation Requirements- Vary by group size
• 200-999 20%• 1000-4999 15%• 5000+ 10%
54 November 17, 2011
Regulatory Issues in U SRegulatory Issues in U.S.
Product approval still difficult in a few statesProduct approval still difficult in a few states Some states object to certain provisions
– Pre-ex variations– Other coverage– Family history questions (Maryland)
Cover those who had breast cancer 2 yrs treatment free– Cover those who had breast cancer 2 yrs treatment free (Florida)
Loss Ratio requirements vary by state
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What is Accident Insurance?
Covers losses due to injuries onlyj y No illnesses are covered Coverage may supplement other g y pp
insurance
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Accident Death and Dismemberment
Accidental Death Dismemberment Paralysisy Loss of Use (speech, hearing, sight)
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Accident Only Indemnity Benefitsy y
– Daily Hospital ConfinementInitial Hospitalization
– SurgeryPhysical Therapy and– Initial Hospitalization
– Intensive Care Unit– Dislocations and Fractures
– Physical Therapy and Rehabilitation
– Blood and plasma
– Ambulance– Diagnostic (x-ray, CAT Scan,
MRI)
– Physician follow-up visits– Accident monthly disability
MRI)– Emergency Room– Transportation
C f b– Coverage for burns– Lacerations
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Accident Only Medical Expense y pCoverage
Full coverage for all medical expenses if due to an accidentS bj t t d d tibl i d i Subject to deductible, coinsurance, and maximum benefit
Maximum benefit equal to deductible on medical planMaximum benefit equal to deductible on medical plan Often sold in conjunction with high deductible plans
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Travel Accident Coverageg
Covers accident death while travelling for business
May cover injury and provide accident medical expense benefit
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Underwritingg
Hard to select against accident coverage
Limited or no underwriting– Actively at work– Not engaged in any hazardous avocationsNot engaged in any hazardous avocations– Restrict by industry or occupation– Off the job coverage vs. 24 hour coverage
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Morbidityy
U-shaped claim slope by age– High for teens early twenties lower in middle ages higher inHigh for teens, early twenties, lower in middle ages, higher in
older/retirement ages
Priced using level claims. Benefit reductions at older ages.Littl ti lif– Little or no active life reserves
Indemnity benefits are not inflation sensitive
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Morbidityy
5
Accidental Deaths per 1,000
4
0
2
3
Dea
ths
per 1
,000
1
02 7 12 17 22 27 32 37 42 47 52 57 62 67 72 77 82 87 92 97
Age
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Morbidityy
Sources: Accidental Death Accidental Death
- National Safety Council Injury Facts- SOA Reports: Group Life Insurance Experience Committee
> Contains A/E for AD&D by industry categoryy y g y- US Department of Labor – Bureau of Labor Statistics
> Fatal occupational injuries by occupation
Other Benefits – typically priced benefit by benefit usingOther Benefits typically priced benefit by benefit using research, company experience, or proprietary data- National Safety Council Injury Facts- CDC NCHS – Nation Health Survey- CDC’s National Health Statistics Reports- Milliman’s Health Cost Guidelines
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Other Considerations Expenses
- Claim administration is less than other products.Varies by type of product Adjudicating accidental death vs- Varies by type of product. Adjudicating accidental death vs.
accident disability
CommissionsL R t Lapse Rates- High in payroll markets.
• Limited or no underwriting• Supplemental nature of coveragepp g
Claims Volatility – Varies by size of block- Low incidence- Potentially high claimsPotentially high claims- Low premium
Renewability – most group contracts are optionally renewable
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renewable
Worksite Total Sales (in millions) andWorksite Total Sales (in millions) andWorksite STD as % of Worksite Total
70 November 17, 2011
Who?Who?
2010 Group STD Inforce Results2010 Group STD Inforce Results
The Hartford 17.9%Unum 12.6%Lincoln Financial Group 7.9%MetLife 7.6%CIGNA 6 5%CIGNA 6.5%Prudential 5.6%Sun Life Financial 5.5%The Standard 5 4%The Standard 5.4%Guardian Life 4.4%Aetna 4.1%
75 November 17, 2011
Who?Who?
2010 Group STD Sales Resultsp
Unum 11.6%The Hartford 10.4%Lincoln Financial Group 9.8%CIGNA 9.2%Sun Life Financial 6 9%Sun Life Financial 6.9%The Standard 6.5%MetLife 5.0%Liberty Mutual 5 0%Liberty Mutual 5.0%Reliance Standard 4.8%Mutual of Omaha 4.6%
76 November 17, 2011
Worksite Group STD Sales as a % ofWorksite Group STD Sales as a % ofEstimated Worksite STD Sales
79 November 17, 2011
Where….is it headed?
½ of the employers show an interest in replacing l id ith l id b fitemployer-paid with employee paid benefits
82 November 17, 2011
Worksite Group STD as a % ofWorksite Group STD as a % ofGroup STD for New Sales
83 November 17, 2011
Where….is it headed?
Health Promotion Programsg
StrategiesIntegrated Packages- Integrated Packages
- Women- Age Groups
84 November 17, 2011
The Need• Affordable coverage for
Part Time
The Need
– Part Time, – Hourly, – Seasonal, – Waiting Period and – other employees not eligible for Employer Sponsored and
Subsidized Major Medical Coveragej g
• Insureds tend to be lower income• Insureds tend to have higher turnoverInsureds tend to have higher turnover
86
The NeedThe Need
The bottom line….– Need low cost coverage– Need easy access– Need practical, first (or early) dollar
coverage– Need coverage that improves access to
carecare– Need coverage that improves health
87
One Potential Solution
Limited Benefit Medical Plans
One Potential Solution
Affordability for Lower Income = Limited benefits Voluntary Typically minimal or no employer contribution Employer Sponsor Role
Open Enrollment and New Hire Enrollment- Open Enrollment and New Hire Enrollment- Payroll deduction- Sometime Employer Contribution
Benefits to Employer Sponsor- Attract and Retain Employees
M di t bl h lth i t
88
- More predictable health insurance costs
Variations of the SolutionThree Key Approaches to Limited Benefit Plans Scheduled Benefits
Variations of the Solution
- Most common approach- More complicated administratively (tracking of internal limits)- Greater risk transfer for small claims- “Feels” more like hospital indemnity coverage- Typically exempt from HIPAA
Expense Reimbursement Expense Reimbursement- More recent approach- Similar to major medical administration
Less risk transfer for small claims- Less risk transfer for small claims- “Feels” more like major medical- Subject to HIPAA requirements
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Accident Only
Example: Scheduled Benefits
Inpatient Hospital: $1,200/day
Example: Scheduled Benefits
p p y ICU: $2,400/day Surgical: $2,500 annual max, per scheduleg p Office Dr Visit: $50/visit, up to 6/year Emergency: $100/visit, up to 3/yearg y , p y X-ray & Lab: $50/visit, up to 6/year Wellness: $75/visit, up to 2/year$ , p y
90
Example: Scheduled Benefits
Scheduled Benefits – Other Benefits
Example: Scheduled Benefits
Scheduled Benefits – Other Benefits– Hospital Admission Lump Sum– Outpatient Benefits– Scheduled Surgical Benefits– Anesthesia Benefit– Skilled NursingSkilled Nursing– Transportation– Prescription Drugs
91
Example: Expense Reimbursement
Inpatient Hospital: up to $1,200/day, to
Example: Expense Reimbursement
p p p y$10,000/confinement and $30,000/yr ICU: no additional Surgical: 100% up to $2,500 Office Dr Visit: up to $50/visit, up to 6/year Emergency: up to $100/visit, up to 3/year X-ray & Lab: 100%, up to $200/year Wellness: Annual Checkup qualifies for Dr. Visit
92
Product Variations
Other Key Possibilities
Product Variations
y May have PPO available Benefits may be on a “per cause” basis Varied Limits
- Lifetime Limits- Calendar Year Limits- Benefit Year Limits- Internal Limits (by type of service)( y yp )- Combinations of above- Limits on frequency of use
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Example: Accident Only
Accident Only Medical
Example: Accident Only
Accident Only Medical Full coverage for all medical expenses if due to an
accident Maximum benefit equal to deductible on medical
planOft ld i j ti ith hi h d d tibl Often sold in conjunction with high deductible plans
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Access
Simplified Access
Access
p Simplified Rating and Limited Underwriting
- Often Guaranteed Issue with actively at work requirement
Low required participation Pooled rates
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Expense StructureExpenses (General and Administrative, G&A)
S hi h it t
Expense Structure
Same or higher unit costs Applied against lower claims costs Customer Service Customer Service
- First insurance for many. Lots of questions.
Low (Voluntary) Participation( y) p- Many enrollment kits per actual enrollee
High Turnover- Shorter duration of coverage
MBR 60% or lower60% in line with minimum for Individual (Voluntary)
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- 60% in line with minimum for Individual (Voluntary)
First (or Early) Dollar Coverage
Question: If you can only afford half the benefits,
First (or Early) Dollar Coverage
which half is better? “First dollar” coverage (low deductibles and copays) with
no catastrophic coverage?no catastrophic coverage?- Covers most expenses for most members.- Not catastrophic- If PPO NetworkIf PPO Network
> Access to healthcare - Insurance Card> Network discount
High deductible catastrophic? High deductible catastrophic?- Benefits very few- They still have to fund high deductibles ($2K-$10k?) out of pocket
97
pocket.
PPACA’s Influence onLimited Benefit Mini-Medical
Plan designs in the market vary between “expense reimbursement”and “fixed indemnity” benefits
Expense reimbursement products will be held to PPACA requirementsExpense reimbursement products will be held to PPACA requirements‒ PPACA bans annual and lifetime limits‒ In the near-term, this would likely wipe out this niche product
Final rules to implement the provision could be written to allow limited‒ Final rules to implement the provision could be written to allow limitedbenefit plans until 2014 when insurance exchanges are set up and taxcredits become available for low wage workers
Fixed indemnity products are “excepted” under the PHSA Fixed indemnity products are excepted under the PHSA‒ 300gg-91(c) Excepted Benefits (3) Benefits not subject to requirements if
offered as independent, non-coordinated benefits(B) Hospital indemnity or other fixed indemnity insurance
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(B) Hospital indemnity or other fixed indemnity insurance
Limited Benefit Mini-MedicalLimited Benefit Mini Medical Plan designs in the market vary between “expense reimbursement” and
“fixed indemnity” benefitsfixed indemnity benefits
Fixed indemnity products are “excepted” under the PHSA‒ 300gg-91(c) Excepted Benefits (3) Benefits not subject to requirements if300gg 91(c) Excepted Benefits (3) Benefits not subject to requirements if
offered as independent, non-coordinated benefits(B) Hospital indemnity or other fixed indemnity insurance
Expense reimbursement products will be held to PPACA requirements‒ PPACA bans annual and lifetime limits‒ In the near-term, this would likely wipe out this niche product‒ Final rules to implement the provision could be written to allow limited benefit plans
until 2014 when insurance exchanges are set up and tax credits become availablefor low wage workers
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Limited Benefit Mini-MedicalLimited Benefit Mini Medical
HHS set up a process to provide waivers from requirements of thep p p qAffordable Care Act. This provided “mini-med” providers a means ofrequesting exceptions from the act.
HHS announced the first round of waivers. Recipients included:- Businesses: McDonald’s, Jack in the Box, Inc.- Unions: United Federation of Teachers, Intl Union of Painters…- Insurers: Aetna, Cigna, Mega Life and Health- A total of 1,578 waivers approved as of 7/22/2011.
Waivers are for one year renewal can be requested Requests must Waivers are for one year – renewal can be requested. Requests musthave been filed by September 22, 2011.
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5-Year Mortality under Existing U/Wy g
1600
1800
1200
1400
1600
Population
800
1000PopulationSuper PNTStd NTGroup
200
400
600 Worksite NTSimp. Iss. NT
0Male Age 45 Deaths per
100,000
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Mortality and Morbidity Results y yImpacted by…
The population segment you’re drawing from
The underwriting filter used to measure risk
A Si lifi d I I t t I t t A Simplified Issue or Instant Issue program must create a combination of market segment and underwriting filter that produces acceptable mortalityp p y
104
Why You May Not Love WorksiteWhy You May Not Love Worksite…
Don’t like all the mortality and/or morbidity risks Don’t have the capital to support growth Don’t have the expertise to enter the market Don’t have the technology to enter the market
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Reinsurers Willing to Help…g p
There are reinsurers out there who do love the mortality and morbidity risk on worksite.
There are reinsurers out there with the technology, expertise and capital to help support worksite carriersexpertise and capital to help support worksite carriers.
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Consultants Willing to Help…g p
There are consultants out there who do know the mortality and morbidity risk on worksite.
There are consultants out there with the tools, expertise and human capital to help support worksite carriersand human capital to help support worksite carriers.
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Intelliscript Prescription Histories Database
Underwriting Tool Utilizing Red / Yellow / Green Classification
Every drug mapped to an underwriting significance• Significant (e g Coumadin)• Significant (e.g. Coumadin)
• Potentially Significant (e.g. Norvasc)
• Likely Not Significant (e.g. Amoxicillin)
Separate mappings for Life / Health / LTC Client may use mappings “out of the box” or customize Valuable in worksite limited underwriting environment
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Valuable in worksite limited underwriting environment
In Conclusion…
There are many roadblocks to overcome before an insurance carrier chooses to enter or grow in the worksite
k tmarket.
Reinsurers are an excellent resource for overcoming Reinsurers are an excellent resource for overcoming specific insurance risk aversion (CI, DI, SI, GI), technology, expertise, and capital constraints that you are faced with.
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