Follow-up with internet leads

[Crabcake Johnny]

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]

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

 

[somarco]

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.

 

[Crabcake Johnny]

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]

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]

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]

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]

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

 

[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.

 

[CHUMPS FROM OXFORD]

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...