How to Get into Groups...

[leevena]

I don't agree with trying to self fund these size cases.

I also don't see the value of advising someone to new to jump in and try to do a political group like a school system.

I would say you are right in chasing the groups under 30 lives.
The 15-20 life market is ripe for the taking. These groups are getting low service from large agency because they are small. If you are independent these will add up to six figures quickly.

You have to be able to sell yourself and your abilities to represent the clients best interests.

I have had a handful of good sales people from other industries that could not sell that idea.

Why do you not agree with self-funding for this size market?

 

[ABC]

Why do you not agree with self-funding for this size market?

The risk is not worth the reward.

Is it worth taking on a spec rate of $20,000 to save only $20,000?

You can't get the group through underwriting. You going to tell a group to take a $120,000 laser?

If they are a healthy group then they better off going with a fully insured product with preferred rates.

I just move an 80 life group off of a Self Funded plan through a TPA. The savings was over $100,000 with employee portals for online wellness and other insurance tools. Who do you think was keeping that 100,000+ at the TPA?

 

[leevena]

The risk is not worth the reward.

Is it worth taking on a spec rate of $20,000 to save only $20,000?

You can't get the group through underwriting. You going to tell a group to take a $120,000 laser?

If they are a healthy group then they better off going with a fully insured product with preferred rates.

I just move an 80 life group off of a Self Funded plan through a TPA. The savings was over $100,000 with employee portals for online wellness and other insurance tools. Who do you think was keeping that 100,000+ at the TPA?

I disagree. Not every small group is a candidate for self-funding. To begin with you need to find a group that is below the risk average (in theory, less than half the groups meet this criteria) for that market. These are essentially the groups that are better risk, lower cost and contribute dollars to the bad risk. Then you need to find an employer who is comfortable with the idea of self-funding. Not an easy task.

There are many ways for a small group to safely self-fund, either be using a high deductible or spaggrate product.

In front of me now is a quote for 30 life group. Minimum savings is $27k with a maximum savings of $125k, and includes terminal liability. So even if this employer purchases this option and then somehow gets sideways with the costs in the future, they go back into the GI market.

These small group self-funded plans generally do not include lasers.

You comment about them being a healthier group and staying with preferred rates is off base. What you are saying to them is that they should help to offset the losses incurred due to the poor risks in the pool.

Your example of saving $100k for a 80 life group must have some kind of context missing. Did the group have a signficantly higher risk than the pool it went into? If it did, then they are now a "taker" in the community pool, as opposed to paying their own claims in a self-funded environment. If the risk was a good risk, then I agree with you and someone was asleep at the wheel.

 

[ABC]

All of the small groups that I have run self funded quotes on have not had enough savings vs a fully insured product. Not even close.

You are claiming you are bringing saving of $27-$125K on a 30 life group. I just don't see that. What is the current fully insured premium? Is the group all family elections? What is the spec rate? What is the agg? What about the run out claims? Are your numbers off of a mature year or immature?

The 30 life cases I am writing on fully insured basis are coming in at about $100-$150k a year total premium.

I have run at least a dozen small group self funded proposal and hybrid proposal. We are talking different SIC codes and demographics. I have yet to have one that was even worth pitching to the client.

We are obviously working two very different markets.

I disagree. Not every small group is a candidate for self-funding. To begin with you need to find a group that is below the risk average (in theory, less than half the groups meet this criteria) for that market. These are essentially the groups that are better risk, lower cost and contribute dollars to the bad risk. Then you need to find an employer who is comfortable with the idea of self-funding. Not an easy task.

There are many ways for a small group to safely self-fund, either be using a high deductible or spaggrate product.

In front of me now is a quote for 30 life group. Minimum savings is $27k with a maximum savings of $125k, and includes terminal liability. So even if this employer purchases this option and then somehow gets sideways with the costs in the future, they go back into the GI market.

These small group self-funded plans generally do not include lasers.

You comment about them being a healthier group and staying with preferred rates is off base. What you are saying to them is that they should help to offset the losses incurred due to the poor risks in the pool.

Your example of saving $100k for a 80 life group must have some kind of context missing. Did the group have a signficantly higher risk than the pool it went into? If it did, then they are now a "taker" in the community pool, as opposed to paying their own claims in a self-funded environment. If the risk was a good risk, then I agree with you and someone was asleep at the wheel.

 

[leevena]

All of the small groups that I have run self funded quotes on have not had enough savings vs a fully insured product. Not even close.

You are claiming you are bringing saving of $27-$125K on a 30 life group. I just don't see that. What is the current fully insured premium? Is the group all family elections? What is the spec rate? What is the agg? What about the run out claims? Are your numbers off of a mature year or immature?

The 30 life cases I am writing on fully insured basis are coming in at about $100-$150k a year total premium.

I have run at least a dozen small group self funded proposal and hybrid proposal. We are talking different SIC codes and demographics. I have yet to have one that was even worth pitching to the client.

We are obviously working two very different markets.

I don't disagree with anything you say. We wholesale, so this is indicative of a much larger geographical market. We also have a fairly sophisticated intake process where we can eliminate many of the unqualifed groups before the even are underwritten. These results are after we work/educate the field sales force to field underwrite.

Have a good day.

 

[PepDaddy]

I don't agree with trying to self fund these size cases.

I also don't see the value of advising someone to new to jump in and try to do a political group like a school system.

I would say you are right in chasing the groups under 30 lives.
The 15-20 life market is ripe for the taking. These groups are getting low service from large agency because they are small. If you are independent these will add up to six figures quickly.

You have to be able to sell yourself and your abilities to represent the clients best interests.

I have had a handful of good sales people from other industries that could not sell that idea.

There are several schools here that are self funding and go through TPA's, although I wouldn't recommended for a newbie.

All I'm getting at is look for trends in the industry that are untapped, and an ability to fill a unique niche or need that is going unfulfilled.

There is a lot of potential for business, you have to be inquisitive and open for things that are not status quo.
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To clarify, small groups are not good candidates for self funding, larger companies or organizations can self fund. rather than a company paying an insurance company, a business thats large enough and have the internal resource (administration staff) can self fund, pay their own claims up to a certian point, and then something call stop loss insurance kicks in to offset the claim issue from bankrupting thier company.

Some smaller companies may opt to self fund for Rx, Dental or Vision, but in my experience have never seen a small company try and go for major medical for their group.

Unless you as an agent have a special pooling type model agreement with a TPA. I can't see how this model will be an advantage to a small group.

 

[ABC]

I don't disagree with anything you say. We wholesale, so this is indicative of a much larger geographical market. We also have a fairly sophisticated intake process where we can eliminate many of the unqualifed groups before the even are underwritten. These results are after we work/educate the field sales force to field underwrite.

Have a good day.

Lee,
You post that you are saving a 30 life group up to $127k but you don't want explain how you are doing this.

I like to hear the answers to my questions.

 

[TwiLight]

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[moonlightandmargaritas]

You have to be able to sell yourself and your abilities to represent the clients best interests.

Isn't this the essence, no matter what group size?

 

[leevena]

Lee,
You post that you are saving a 30 life group up to $127k but you don't want explain how you are doing this.

I like to hear the answers to my questions.

I thought I did. We use a variety of funding vehicles, including; Captive Insurance Companies with risk sharing, High Deductible with self-funding underneath the deductible, Spec and Agg, and Spaggraget. They key is not so much the product, but with the initial risk analysis. You need to find the groups that fit, meaning, risk that is below the average and employers who understand and are comfortable.

Rating of the risk is done in a similar manner to the fully-insured carriers model. Since there is usually no claim experience to rate these size groups, the risk is done based off of other factors, such as area, group census demographics, medical questionaires, etc. By the way, the medical questionaires (employer and employee level) is far more reliable than claim reports that may reflect months old information.