Continental Life

[senior-advisor-indiana]

CLI is not the same carrier it was before Aetna purchased them. Same can be said for AMS when purchased by GR, and later GR purchased by UHC after Pat Rooney died.

Carrriers that subjectively and arbitrarily lower rates to gain market share, encourage GI business with low rates and high commissions, and especially if they are mostly competitive at older ages will crash and burn.

I have managed very large blocks of business for carriers in the past and seen what happens. I really don't care if anyone buys my argument or not. CLI will be raising rates 20%+ within 2 years if they maintain their current market plan.

GI Medigap business has 130%+ loss ratio. The only way to maintain rates is to offset with a significant amount of underwritten business.

Yes, I do place most of my business with New Era, and yes, they are not competitive above age 75 - 80. So what? That business is generally short lived and very expensive if the policies stay on the books longer than 3 years.

A carrier will do well if they properly price and underwrite ages 67 - 75 or so to give them a balance against T65 entries.

New Era pays a lower commission than most anyone, pays $25 on GI business and half commission on T65. Because of that many agents won't write that business with them.

Because of that I have very little competition.

Because of that they have had increases of 9%, 6% and 6% in my state the last 3 years which is less than anyone else. Because of that no one snipes my business. Because of that no one complains about their rate increase.

Everyone is happy.

Agents that want to play games with themselves and their clients are just setting themselves up to lose business when I come along. I take a lot of business away from MOO (a hot carrier from a few years ago) and AARP/UHC.

I expect I will be doing the same with CLI and AFLAC policyholders in the next 12 - 18 months. Keep selling that junk, it just makes my life easier. I feast on agents that don't know what they are doing.

I see where you are coming from somarco but I think you will be eating your words when New Era takes a huge increase also. If New Era had the "secret recipe", don't you think other companies would follow suit? the block of business doesn't stay healthy forever.

 

[somarco]

If New Era had the "secret recipe", don't you think other companies would follow suit? the block of business doesn't stay healthy forever.

I may be wrong, but I don't think so with regard to New Era. Their T65 business is off in states where they reduced commissions and GI is almost non-existent. They will still write some T65 but at a much slower pace than before.

As they balance their block and get it close to 50% T65/GI and 50% underwritten they should do fine. About 60% of my gap biz is T65 with the other 40% underwritten. Also, about 85% is plan G with the rest mostly F with a few N's. This year for the first time they split the renewal giving 7.5% on F and 6% on G. I win!

Other carriers are not smart enough (seriously) to follow a similar path. Just look at 2020-2011 when MOO and Anthem had their GI party and how that turned out. Those are big boys who should have known better and now they, and their policyholders, are paying the price.

CLI should be generating 2013 rates in about 60 days. It will be interesting to see what happens then.

I checked their rates in TN and they are not very competitive there. Wonder why they are more competitive outside of their domicile state? I can't answer that one any more than I can say why Cigna and Humana are extremely competitive in a couple of states for major med and not even on the radar in others.

 

[GreenSky]

I checked their rates in TN and they are not very competitive there. Wonder why they are more competitive outside of their domicile state? I can't answer that one any more than I can say why Cigna and Humana are extremely competitive in a couple of states for major med and not even on the radar in others.

If you don't know the answer to easy questions like those, how do you ever answer when your wife asks what you want for dinner?

Rick

 

[somarco]

She doesn't ask.

She eats what I cook, and I am a damn good cook.

 

[GreenSky]

She doesn't ask.

She eats what I cook, and I am a damn good cook.

That explains why she keeps you around. I knew it wasn't your charm and good looks.

Rick

 

[senior-advisor-indiana]

I may be wrong, but I don't think so with regard to New Era. Their T65 business is off in states where they reduced commissions and GI is almost non-existent. They will still write some T65 but at a much slower pace than before.

As they balance their block and get it close to 50% T65/GI and 50% underwritten they should do fine. About 60% of my gap biz is T65 with the other 40% underwritten. Also, about 85% is plan G with the rest mostly F with a few N's. This year for the first time they split the renewal giving 7.5% on F and 6% on G. I win!

Other carriers are not smart enough (seriously) to follow a similar path. Just look at 2020-2011 when MOO and Anthem had their GI party and how that turned out. Those are big boys who should have known better and now they, and their policyholders, are paying the price.

CLI should be generating 2013 rates in about 60 days. It will be interesting to see what happens then.

I checked their rates in TN and they are not very competitive there. Wonder why they are more competitive outside of their domicile state? I can't answer that one any more than I can say why Cigna and Humana are extremely competitive in a couple of states for major med and not even on the radar in others.

If you are giving them 60% T65, what makes you think other agents aren't giving them more? You could be right but I highly doubt it. I haven't seen a company in 10 years keep their rates down, no matter how low of comp they pay or how tight their UW is.

 

[somarco]

I haven't seen a company in 10 years keep their rates down, no matter how low of comp they pay or how tight their UW is.

I have.

Corroon and Black ran an MET solid for 15+ years. Made money every year and was always in the hunt. When the sr underwriter left to form his own company the trust blew up within a couple of years.

The underwriting management firm he started is still in business over 20 years later, still competitive and still profitable.

I am not saying they are always the lowest. They aren't. You win sprints by having the lowest rates for a few months or maybe a year.

But if you want to win races you don't win every sprint.

This is a race and I don't see anyone else in the market doing all the things necessary to be a long term player.

The Medigap business is like the dental insurance business. If you know what you are doing you can make a lot of money long term. Not by having the lowest rate, but by delivering a value based product at a fair price.

A very good friend took over Hoosier Dental about 20 years ago and built it into a national organization (GroupLink). Rock solid company, very profitable and consistently competitive. Roger sold that company for a lot of money, stayed on for a while, then left.

That block has already started to slide because they abandoned the things that worked and made it a competitive force in the market place.

 

[senior-advisor-indiana]

I have.

Corroon and Black ran an MET solid for 15+ years. Made money every year and was always in the hunt. When the sr underwriter left to form his own company the trust blew up within a couple of years.

The underwriting management firm he started is still in business over 20 years later, still competitive and still profitable.

I am not saying they are always the lowest. They aren't. You win sprints by having the lowest rates for a few months or maybe a year.

But if you want to win races you don't win every sprint.

This is a race and I don't see anyone else in the market doing all the things necessary to be a long term player.

The Medigap business is like the dental insurance business. If you know what you are doing you can make a lot of money long term. Not by having the lowest rate, but by delivering a value based product at a fair price.

A very good friend took over Hoosier Dental about 20 years ago and built it into a national organization (GroupLink). Rock solid company, very profitable and consistently competitive. Roger sold that company for a lot of money, stayed on for a while, then left.

That block has already started to slide because they abandoned the things that worked and made it a competitive force in the market place.

I get what you are saying. I meant I haven't seen a med supp company keep their rates stable in the last 10 years...

 

[taterpeeler]

Bob...love ya man but sorry gotta go with this... Here is the secret sauce for Medicare.....step one, sell lowest cost plan... Step two client get rate increase... As long as rate increase is in line within 10 bucks or so a month of a new lower cost plan stay put on old plan.. You just bought another year. Next rate increase puts the plan out of line with market then move them to new lowest cost plan... If they are declined then try the next lowest cost plan... If they are denied with that plan then hello advantage plan next enrolement period unless they wish to continue paying the inflated rate to keep that doctor choice.... It's the typical insurance cycle I have been using for 20 years.. You play till the client can't play but with Medicare the can play every year with mapd plans

That my friend is the insurance cycle. You roll roll roll you client gently down the stream until the river drys up

 

[somarco]

Charles, my system works well for me. It's not for everyone, but it works for me.

Most folks resist change. Even more so as they get older. Seniors want to make a decision, move on and forget it . . . at least until the pain gets to be too much.

Perhaps that is why I wrote a number of folks that wanted off MAPD. Could have written more if they were healthy, or the plan was going to be discontinued.

My renewal income grows steady year after year (although Obamacrap is going to put a major dent in that) and I have very little service work. Even when a client complains about a renewal, like one did this week ($20 more per month on major med), I run the numbers. Show them there is nothing lower and the plan that is closest is $40 more than her current premium. She of course thinks she can get more coverage for less money, so I show her those plans at $70 a month more.

Slow and steady works for me, but it isn't for everyone.

I meant I haven't seen a med supp company keep their rates stable in the last 10 years...

Probably not.

I inherited a New Era client that moved here from another state about 3 years ago. He has had New Era now for at least 6 years. Every year when he gets his increase he calls me. I run the numbers, he keeps his plan.

He may need or want to change by the time 10 yrs rolls around. We will see. I would like to find a way to get paid, but if not, so be it.

Medigap is no different from any other supplemental product. It is not hard to make a profit and be competitive year in and out unless you get greedy. Medigap is a little more volatile than most supplemental lines since their cost per claim increases every year in proportion to what Medicare does or does not pay, but still should not be subject to wide swings unless the carrier is doing something stupid, or they are not monitoring their block and trending it.

As long as DC doesn't f*ck with it, the market can remain viable for consistent players for a long time. New kids will crop up from time to time but they will soon vanish.