Critical Illness - Group Participation Success Factors
April 10, 2013| Von Steve Rowley |
Region: North America
Our last two Critical llness blogs focused on the challenges associated with multilife underwriting as it pertains to CI insurance. Both highlighted the importance of participation levels on voluntary cases. This entry focuses on some of the more relevant factors thought to be associated with favorable participation levels and experience.
As with any risk assessment tool, there is no single solution that perfectly fits every case. Instead there are a myriad of factors that, when combined, help to predict whether an enrollment will be successful or not. The outline below contains some useful factors for assessing the likelihood of achieving strong participation. These are in no particular rank nor has any attempt been made to weigh their relative importance.
- Single Shift Centralized Group: For face-to-face enrollments or in cases where the employer permits group meetings with employees, a single shift, single location employer is likely to yield better results. A producer or enroller has a better chance of direct employee contact when all employees are present at same time. For example, a single site, 9 to 5 insurance company is likely to result in greater face time than a multi-site, 24/7 nursing home chain where the number of visits required to reach all employees in all sites could be cost prohibitive.
- Existing Producer Relationship with Group: The power of incumbency cannot be understated. A producer who has already successfully enrolled numerous other products has a stronger relationship with both the employer and employees. This producer can often leverage established relationships to achieve greater employer support, increased employee face time, and increased participation levels due to the trust developed over time.
- Existing Insurer Relationship with Group: When an insurer already has products enrolled and has demonstrated a high level of customer orientation both in routine administrative requests and claims handling, a powerful force of name recognition is established through word of mouth, making employees more receptive to additional sales overtures.
- Two New Products Being Solicited: Critical Illness insurance is sold, not bought. Few consumers have heard of the product, and still fewer understand the financial need that it meets. Unlike many other employee benefits such as life, health, dental, etc., most consumers need to be educated as to the benefits of CI insurance and their risk of significant out-of-pocket charges should they suffer a critical illness. When enrolling a veritable smorgasbord of offerings, there is too little time to educate the consumer and most will default to the types of coverage they already know and understand.
- Strong Employer Support: This is an important factor in conducting a successful enrollment. Employees typically have a stronger relationship with their employer than their insurer. As a result, strong employer sponsorship tends to imply an endorsement of an insurance company that may be largely unknown to the employees. When the employer supports the insurer in multiple pre-enrollment educational efforts and permits direct access to employees, strong participation levels are more likely to be achieved.
- Favorable Age Mix: Although fewer insurers are requiring an employee census as a condition to providing a quote, this remains a valuable tool and will eliminate much of the “guess work” and reliance on “hearsay” common in our industry today. Submission of a detailed census, showing ages, incomes, dependents and length of current employment, may permit the underwriter to make a more favorable offer that will result in higher participation.
- Direct Face-to-Face Contact: CI insurance is still a new concept to most consumers. Few will be familiar with the workings of this product or understand the financial risk associated with suffering from a critical illness. As such, it is a product that must be “sold.” A simple check box option is likely to result in poor participation unless the enrollment has been preceded by educational efforts that demonstrate the financial risks associated with surviving a critical illness and the value of this product. Informational brochures and well designed web sites may help with this, but are generally less successful than a face-to-face discussion.
- CI Trained & Proven Enrollment Firm: Unfortunately, the low level of awareness and knowledge of this product is not limited to consumers. Many benefit enrollers lack thorough training related to CI insurance. In fact, it is not unreasonable to suggest that many have no such exposure or understanding at all. The fact is that CI enrollment success hinges heavily on the ability of the enrollment firms to completely understand the consumer’s need for this product. Even those with a greater knowledge of CI insurance may struggle to differentiate one insurer’s unique product offering from another’s. For this reason, enrollers more closely affiliated with a single company, or enrollment firms that have been specifically trained in CI by an insurer, should produce greater participation levels.
- Favorable and Affordable Plan Design: Fortunately, CI insurance has yet to be commoditized and for this reason is not as price sensitive as many other products. Still, consumers remain cautious with their spending. With an average group CI benefit of $14,417 (worksite voluntary) and $22,241 (true group), there is little need for Guarantee Issue benefits that significantly exceed these levels. Such limits may dissuade consumers from purchasing due to the associated expense, and lead to increased antiselection. Multiple, complex product features and options permitting decisions at the employee level may also have a detrimental effect on enrollments, causing consumers to defer the purchase decision.
Every group has its own dynamics and no single approach works for all. However, underwriters and actuaries may want to consider these factors when deciding to extend an offer or to make an exception on a case.