Cancer Insurance and Clark Howard

[0b1kanobee]

Had lunch with the Cigna rep today. She said they get a lot of business from eHealth but 40% of apps are declined. Of the ones approved over half drop off the books within 90 days.

Can't understand why carriers put up with that kind of crap. They get similar results from phone mills.

Good question and I would say that one way or another, it is because they are still making money with it and maybe the advertising aspects involved.

Seems like quite a good bit of information could be acquired via this method of the internet and would have to say that information is valuable to others for resale.

if it wasn't profitable some way they wouldn't be doing it.

 

[somarco]

Acquisition costs for new business is rather high. If you get in 100 apps you still have to review them, order APS, etc to issue 60. If half of those drop off in 90 days you net 30 for all that effort and expense.

If they relied on folks like eHealth, in house and phone mills to generate all their business they would either go broke or have to raise premiums dramatically.

We also discussed a local phone mill agent that generates 400 apps a month (just in GA) for Coventry. Writes almost no business with anyone else unless they are rejected by Coventry and the applicant takes the time to call them back and ask for a second opinion.

Then they apply with Aetna.

Coventry funnels $20k per month into that agent's advertising budget to pay for print ads in newspapers all over the state.

Out of 400 apps they get approvals on 200 and half of those are off the books in 90-120 days.

This is not profitable for the carrier so the hits they take on that business model are passed on to the other 900 agents that are also writing business with them. The only one that makes a profit off this is the mass marketing broker.