Friday, July 28, 2006

How Much is Enough…

So I had an appointment yesterday [ed: just the one?] with a potential new client. It’s a very small tool-and-die shop, with 5 employees (including the owner), but only one or two who’d be taking the medical coverage. Group carriers don’t much like cases such as this, and there were some other factors, so we were looking at a couple of individual medical plans: a “traditional” PPO plan, and an HSA (Health Savings Account) plan.
The owner had asked for a lot of info to be faxed and/or emailed over ahead of time. I usually try to avoid this; not because I have anything to hide, but all the material, with no context, actually confuses more than clarifies. Still, the client is (almost) always right, so fax and email I did.
I always ask a lot of questions, one of which being how much of the premium the employer intends to shoulder. In this case, he wanted to pay the whole amount, and we discussed several options. Among other things, I suggested that he consult his accountant to see if a Section 105 plan might be useful in this instance.
When I arrived, it quickly became apparent that this was going to be a colossal waste of time (theirs and mine): the employer who had been so adamant about having that material ahead of time had barely glanced at it, and one of the two employees to be covered wasn’t available. Still, I’d made the drive, so why not.
As we began to talk about their needs, it became evident that they really wanted to see the quotes. They had quotes from two other agents (I knew this ahead of time, so I only ran numbers for carriers from which they had no quotes already). The problem that developed was that at least one of the other agents had misinformed them about how insurance works (or, equally likely, they had misunderstood). So when I explained how their renewal rates really had nothing to do with their own claims, and that companies couldn’t arbitrarily cancel them (having explained the difference between owning a policy versus association plans), and why quotes are, essentially, meaningless at this stage, I could see that they were confused, and uncomfortable.
At that point, it was obvious that they didn’t trust what I had to say, so I offered (in fact, I essentially insisted) to leave. If we can’t establish a relationship based on trust, then were not going to have a useful business relationship at all, and I just don’t need the aggravation. To my surprise, they asked me to stay, and we got to the real issue:
All three of us were telling this client different, and mutually exclusive, things (or, again, they misunderstood one or more of us). And so it came down to credibility, and a simple question: why should they trust me? I offered to give them referrals to other clients; they declined, because of course I’d only give them my best ones. I explained that, as a CE (Continuing Education) provider and instructor, I teach other agents about this very subject. “So?” Finally, I reiterated for them all the various ideas I’d brought to the table (e.g. HSA, 105, etc), which none of the other agents had suggested. And still, they just couldn’t, or wouldn’t, make up their minds.About halfway through, I learned something else: one of these employees is covered under his wife’s group plan, and her employer pays 90% of the family premium. Why then, I asked, are we even talking about this? Turns out, my prospective new client would be paying 100% of the employee’s premium, and they both thought it would be a good idea to have both plans in place.
Hating myself in advance, I asked “Why would you want to do that?”
Turns out, they think that having two plans in place will mean that the second plan will pay the balance of what the first one doesn’t, giving this gentleman 100% coverage.
It was then my sad duty to explain to them how COB (Coordination of Benefits) really works, and to disabuse them of the notion. But, I added, why not have the employer buy an individual disability plan, instead, to help put food on the table in case there is a terrible medical situation.
They seemed to like this idea, and one would think that it would have convinced them of my expertise, and interest. Sadly, it didn’t appear to.
And so I bid them farewell, and invited them to call me if I can be of further assistance. I’ll let you know if they do so.
There are a number of lessons here. First, quite frankly, it’s not financially beneficial to me to spend much more time with these folks. Generally, I try to develop customers into clients, and build a more permanent business relationship than just one or two individual medical plans. That doesn’t appear likely, at least not at this point.
Second, I have to wonder if there’s some magical number of agents and/or quotes that a given client really needs in order to make a sound decision. Since all of us have access to basically the same carriers, and all of our quotes from a given carrier will be identical, how does the client differentiate between agents, and how does he know which one(s) to trust, and which one(s) not to?
Finally, it also shows that sometimes more isn’t better: these folks have a surplus of quotes, brochures and charts, and they can’t decide what to do.
Oh, one last thing: in discussing the HSA, the question of exclusions came up. I explained that brochures, by nature, have limited information about these kinds of things, but that the policy will include every detail.
And then I stopped, and corrected myself: for the first time, I explained to a potential client that the policy does not, in fact, spell out every relevant detail. Neither the brochure nor the policy will warn them that non-covered expenses will be excluded from network discounts.
Not quite a happy ending.
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