Thursday, August 23, 2007

Sleight of Hand

At least one carrier who is relatively new to the individual health market seems to be making a big splash. They rolled in to Georgia 4 months ago with a plan designed to look very much like popular Blue plans. It wasn't enough to come in with wannabe plans, they had to juice it up by "throwing in" a rich dental DMO and vision plan.

They set their commission structure higher than Blue and rates about 15 - 20% lower than Blue. They talked about how their plans stack up against Blue in roll out meetings.

They even hired folks away from Blue to staff their new marketing offices.

Did I mention their rates are 15%+ less than Blue?

Oh but, those are just TEASER rates.

You see, once the application goes to underwriting all bets are off.

Most carriers will give brokers enough information on underwriting that they can prepare the client for the final offer.

Not these folks.

Most carriers field underwriting guides are 15 - 60 pages.

This one is barely 6.

Many carriers tell you about how much they will adjust the rates for medical conditions and scripts.

This just tells you the rate may be modified.

Did I mention their starting rates beat just about everyone?

This carrier who is new to the individual business paid (what I presume to be) a big basket of cash to Milliman for an underwriting guide and rate manual. Milliman is perhaps the premier actuarial firm for medical rates & data.

They also are ivory tower kind of folks, but then, they ARE actuaries.

So it seems this carrier had Milliman set their rates with the idea of insuring mostly folks who can walk on water.

Everyone else needs to open their wallet a bit more.

I just sent in a case that included a lady with GERD. Some carriers don't charge extra while others will surcharge up to 25%.

This one came back with a 50% rate up. Had it been 51% she would have been declined.

What kind of idiocy is that?

Of course my client is not happy. Neither am I.

This makes me look like I don't know what I am doing and in the case of this carrier that is true. They don't offer pre-screens. They don't want to tell what underwriting MIGHT do. We are expected to trust them.

Sure, I trust them.

Trust them to be totally unpredictable.

This is not fun.
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