Average Retention Rate Individual Health

[shaedzs]

I work mostly on the P&C side in personal lines at my agency but I was looking for feedback from agency's that specialize in individual health as to what their average retention rate is? I'm looking into developing my individual health book and need some help developing some core assumptions regarding lifetime value of an individual health client. Also, what is a good assumption for the average premium for individual health insurance in California? On the personal lines side, I have calculated from my agency that the average Home/Auto policy generates about ~$100 in revenue per year, per policy. (Counting each car and each home as a policy) Retention rates are about 1-2 years for an auto only client, 4-6 years for a home only client, 8-9 years for an auto/home client and 10+ for auto/home/life client.

 

[somarco]

Too many factors.

Some agents never get clients to the first renewal, while others will keep them for years.

I have some (individual major med) clients that have been with me for 5 years. Average is probably 3 yrs but that is changing.

The economy + ARRA subsidy is playing havoc with retention, renewals and new sales.

 

[djs]

As a P&C agent, I would plan a year for any health policy. You may get 18 months, maybe longer, but with health, anything past 12 months I would look at as a benefit, not part of a long term plan.

Now, it depends a lot on who you market to. If you market small business owners, where the husband and wife work the business, they will be around for a while. If you sell to a small business because the wife got laid off from her current job and they lost benefits (Somarco's post changes this, you won't write them currently), you will have them until she goes back to work.

Most of the health policies I write in California are small group (frequently just husband and wife) for the guarantee issue, or they are to bridge a gap in work for one of the spouses.

The small groups tend to stick around as long as the business does. Most of my groups are under 10 employees, to small for a lot of brokers to go after. This is also the size that requires the most hand holding per employee. Being a P&C guy, I'm used to that and setup for it.

The hardest thing for a P&C guy to do with health insurance is to realize you are in the dark. When you write an auto, you pull and see the MVR so you know before you fill out the app, what you are up against. With health (similar to life), you are all in, spent your time and money, and hope some underwriter has mercy and approves the application. It's a different world.

By the way, the best place to get your information on average retention and average premium would be your blue cross RSM. They will tell you everything you want to know. It will be slanted towards blue cross policies, but it doesn't vary that much.

Dan

 

[shaedzs]

Thanks a lot Somarco and DJS. From the sound of things, going after small groups may be a better long term solution than soliciting individual health insurance. Would you say this is a fair assumption? My intrigue for individual health insurance comes from the fact that it is fairly challenging to solicit personal lines P&C in an active manner do to the "do not call restrictions." Most of my current marketing is passive with mailings and while it is effective, I am looking to expand in a way where I'm not waiting for clients to call me. I was envisioning setting up an individual health producer in my office that can churn and burn individual health internet leads in, say, a 10 mile radius around my office. In addition to health revenue, the internet leads would open up cross sell opportunities for personal lines P&C on the cheap for my telemarketer to call, as well as provide low cost email marketing.

 

[bill3173]

Too many factors.

Some agents never get clients to the first renewal, while others will keep them for years.

I have some (individual major med) clients that have been with me for 5 years. Average is probably 3 yrs but that is changing.

The economy + ARRA subsidy is playing havoc with retention, renewals and new sales.

My retention rate is 93% on health and my life and DI persistency was pegged at 97% the other day by the BGA that I use.

I grill people pretty hard before I take an application, not to the same extent as you, but enough so that we're not wasting each others time.

You think that agents that have't been affected, yet, are in for a brutal assault?

 

[moonlightandmargaritas]

The vast majority of my small business/self-employed/professional health clients have stayed with me forever...

The garden-variety-internet-lead type person, not so much. Get a job, lose a job, etc. I'm not using them anymore.

 

[somarco]

Hard to say, Bill.

Until a few months ago I rarely lost clients. Seems I have a fair number in the housing related market (builder, remodeling, real estate sales, landscaping, etc.)

Also have some IC's in various lines of work that are coming up short on money.

This has been compounded by folks who lost their job and are taking advantage of the ARRA subsidy so I am not picking up as many COBRA eligibles as before.

Seems the last 6 months have been brutal on cancellations, late pay and not as many buying as before.

And this next one doesn't seem to be just me. I hear this from the carriers as well.

With more folks losing group cover it seems the number of sick people applying for coverage is increasing. Seems like 90% of the people I talk to have some kind of health issue. Not all of them are serious, but enough that I am doing more pre-screens than before. Also getting more apps declined but part of that goes with the territory.

 

[ABC]

This is a good topic.

My avg retention on Individual policy is about 3 years. Now I have a lot of clients that have been with me longer than that.

The retention level is going to depend on you.

What kind of service are you giving your clients?
What products are you selling?
Are you selling the most competitive carrier in your area?

You will lose some of your client to relocations, group plans, they are broke and so on.

 

[bill3173]

Hard to say, Bill.

Until a few months ago I rarely lost clients. Seems I have a fair number in the housing related market (builder, remodeling, real estate sales, landscaping, etc.)

Also have some IC's in various lines of work that are coming up short on money.

This has been compounded by folks who lost their job and are taking advantage of the ARRA subsidy so I am not picking up as many COBRA eligibles as before.

Seems the last 6 months have been brutal on cancellations, late pay and not as many buying as before.

And this next one doesn't seem to be just me. I hear this from the carriers as well.

With more folks losing group cover it seems the number of sick people applying for coverage is increasing. Seems like 90% of the people I talk to have some kind of health issue. Not all of them are serious, but enough that I am doing more pre-screens than before. Also getting more apps declined but part of that goes with the territory.

Well, I don't understand it then, unless the tidal wave hasn't hit me yet. I've placed more apps thus far in July than I did for the entire month last year and I've had 1 first year cancellation for the 12 months ending June 30.

I've had more inquiries from uninsurables, but that's it. I'm more careful now than ever. Just got off the phone with a prospective client who was told that her Pre-Ex was covered under an STM and counted towards the deductible, she found out otherwise and wants to do a perm with me.

The lady was very nice and I don't think the agent has anything to be concerned about, but it really made me think about how much trouble you can get in, from ignorance or deceit.

 

[somarco]

Maybe you are in a pocket where the economy is going gangbusters. We have 9.6% unemployment state wide and some areas approaching 15%. Housing prices have declined 30%+ and Georgia has more bank failures than any other state except CA.

We also voted for Mcain.