Price Stability

[ksigmtsu]

After the recent block increase of nearly 33% to the Mutual/United old block here in Tennessee, I was curious if and which carriers were prone to increases of that nature. Is this something that basically every carrier does sometimes, or do some carriers basically never have increases of this sort?

I cannot find a resource for data as to their rates over say the last 10 years, so I was curious what some of the old timers experiences with rate increases per carrier were, and who they think has had the most price stability?

I am somewhat uncomfortable placing unhealthy GI clients in MOO after what they just did, same with Gerber since their companies are so attached to each other. UNL and Admiral haven't been around long enough to really be sure of what they're up to.


In particular, the companies I am wondering about are MOO, Gafri/Loyal American, Genworth/American Continental, BCSBT, and AARP/UHC.

I don't necessarily want to know who is cheapest today, I want to know who would be the cheapest if their policy was put in place 8-10 years ago.

 

[mkter35]

Thats is impossible to predict becuase it all depends on the claims ratio. A stable company that usually dosent take big increases can take a big hit if they are losing money on that block of business, which we have just seen.

 

[somarco]

The senior market is not my gig, but I can tell you what generally happens in the medical business.

Carriers that have been around a while usually don't ride the waves but skim across the top. The newer ones are usually given bad advice on pricing and underwriting and quickly get in trouble. When that happens they overreact by raising rates and/or pulling out of the market.

MOO has been in the senior market forever, so even though they are bucking the trend by offering GI health products I suspect they know what they are doing and will survive with very little bruising.

OTOH, they did exit the major med market almost overnight a few years ago after being one of the major players, right behind BX, for a number of years.

So MOO is a mixed bag, but I would bet on them having the staying power.

Gerber on the other hand has been all over the boards, in and out of various segments of the health insurance business and not doing any of it exceptionally well. This doesn't mean they haven't found their niche, only that you can't predict their future based on the past.

The one thing that is almost always true is this. When a carrier seeks to buy business with low rates and loose underwriting it will come back and bite them (and you) eventually. This is not just limited to the health biz, it happens with all lines of coverage.

Personally, I am always suspect of a carrier that seems to do everything better than everyone else. The world doesn't work that way.

I have clients that have been on the same plan with the same carrier for years. Most of my clients fit that description. This is under 65 major med but you can make the same charge with other lines of business if you pick a good carrier and put them in the right plan.

You also have to educate your client on the front end, not just show them a cheaper rate. If you are getting most of your business by showing cheap rates you are going to work yourself to death and do a disservice to your clients.

 

[ksigmtsu]

Would the carriers with tighter underwriting and slightly higher rates be less succeptable to this? Like say in the case of Loyal American or Genworth, where they actually rate people in classes similar to major med compared to a Pass/Fail Gerber/Moo Situation.

Are the non-traditional letter supplements less succeptable? Say G compared to F?

 

[moonlightandmargaritas]

Would the carriers with tighter underwriting and slightly higher rates be less succeptable to this?

Of course they would, the more accurately the risk is priced in the beginning, the more rate stability it brings.

Where it goes sideways is when there are other conversations (let's build market share!) that influence the risk pricing and produce artificially low rates.

 

[somarco]

the more accurately the risk is priced in the beginning, the more rate stability it brings.

Where it goes sideways is when there are other conversations (let's build market share!) that influence the risk pricing and produce artificially low rates.

Carriers are in a constant state of flux.

Price too high and/or too tight on underwriting and you won't gain enough traction to obtain market share.

Too low and/or too loose on underwriting and you pick up market share but loose your shorts.

Carriers that are neither too high (like Time) or too low (like Coventry) are going to come apart at the seams.

Too strict on underwriting (like Cigna) or too goofy (like Coventry) will also come back to bite you.

(Examples listed are under 65 major med but the concept will apply to any insurance line).

Ideally you want a carrier that is consistently neither high nor low and is reasonable on underwriting.