Volume 2, Issue 1
October 2005    
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Jennifer Kyle, Assurant

As the fastest growing sector of the dental market in 2004, voluntary produts, whether measured in new subscriber sales or new premium, began 2005 with a lackluster performance in the first quarter. Even PPO products experienced a reversal in their track record of positive growth. However, expectations are that sales will pick up in both categories by the end of 2005. (1)

So how are companies managing their voluntary and PPO business?

First, one must consider that voluntary dental products are defined differently by individual companies – definitions range from employer contribution to participation to plan design or a combination of these features. At our November conference, we will discuss the various definitions of voluntary dental, emerging trends in this sector and how it is viewed in the marketplace. Participation is a differentiating factor of this product for most carriers – so how are ongoing participation levels monitored and maintained? Join us to discuss these challenges in the voluntary dental sector in a session led by David Ward, Director, Corporate Dental & Life Underwriting at Humana Dental.

Is your PPO network performing up to expectations with regard to your competitive position? Are your network development and your product strategies producing the expected results? Ruth Ann Woodley, FSA, of Ruark Consulting LLC, will be discussing these and other findings from the company’s first study of Dental PPO network size and discounts. This independent study has provided participating companies with factual data on rankings of fee discounts and network size.

While carriers refine their fee discounts and network strategies, what is happening in the dentist’s office? We will hear from two dental practice professionals, Steven Hymovitch, DDS, MBA, and Julie Hymovitch, MA, MBA, on the challenges involved in running a successful dental practice, including considerations on joining a dental network. Our speakers will also share with their perspectives on the impact of new technology and trends in dentistry and the challenges they face in recruiting new dentists.

(1) LIMRA International and NADP U.S. Group Dental Plans, Executive Summary, First Quarter 2005.

HURRICANE KATRINA - Rich Clement, The Smith Group

According to some industry experts, overall loss estimates for Hurricane Katrina will exceed both the Sept. 11, 2001 terrorist attack and Hurricane Andrew. However, the full extent of the damage will not be realized for months if not years.

To better understand how this catastrophic event may immediately impact the disability industry, the GUAA disability committee conducted a survey to understand company responses. Below we provide a copy of the results.

Handling quoting, mail delivery and premium remittances:

  • We will quote if the prospect's place of business is intact, power and communication restored, and otherwise the same as pre-storm.

  • So far with respect to quote activity we're not doing anything differently.

  • We are providing options to policyholders who may be unable to pay their premiums on time, and to claimants who are unable to receive benefit payments through the US Postal Service due to delivery disruptions. Policyholders and claimants are being encouraged to contact us to establish alternative arrangements. We are continuing to develop answers to the benefits processing questions and other questions arising due to the after effects of Hurricane Katrina.

Assisting Claimants in affected areas:

Here is some initial information about what we are doing to assist claimants in the affected areas:

  • Incoming Calls: The professionals in our call center are receiving calls from areas experiencing severe flood damage. The immediate concern is seeking help in stopping disability benefit checks or having them forwarded to an alternate address. Our professionals are offering to redirect the disability check as calls are received to an address designated by the caller.

  • Incoming new claim submissions: For telephonic calls, we identify these claim submissions and notify our claims team. If medical information is needed (for paper or telephonic claims), but we cannot reach the treating physician, we will use any diagnostic information provided by the claimant. The claims examiners will contractually review the claims and issue a 3-week courtesy payment if benefits are payable.

  • Existing claims: We are taking a more lenient approach while waiting for follow-up information, understanding that it is currently difficult or impossible to provide medical information from the treating physicians’ office. We will grant extensions to allow claimants in these areas to have more time submitting additional information that may be required.

  • We are continuing to review other alternatives to assist with lost, returned or misdirected checks and will provide additional information shortly.

  • We are very sensitive to the current events surrounding the Hurricane Katrina catastrophe and we are making every effort to make our claims practices as flexible as possible for our customers during this time of need. To that end, we are taking the following steps to best serve our impacted customers:

  • We are offering benefit payment options outside of our usual claim practices. We will accommodate claimant requests to send their disability checks to:
    i. An open employer location,
    ii. A third party address where the claimant is staying, and
    iii. Via electronic funds transfer directly to the claimant’s financial institution for short-term disability and long-term disability payments.

  • We will accept requests for a temporary address change via telephone from the impacted states without requiring that the request be initially submitted in writing or confirmed by a written request.

  • To ensure claimant security and identity, we will ask callers some additional questions about their account before making any check distribution changes.

  • Over the next 60 days, customers in the impacted areas will remain active and will not experience any lapse or termination of coverage due to non-payment of premium.

  • Website identifying news releases from affected gulf states is hptt//www.naic.org/http://www.naic.org/

  • We are still in the stages of assessing exactly what we have in pending inventory for current prospects and recent quotes plus renewals and policy changes. We must assess both home office and field underwritten business. Each case will really need to be evaluated on its own merits considering all the unique factors that may come into play. Unfortunately there is no one answer that is going to be the right one for all business.

Frequently Asked Questions:

  • How will electronic fund transfers be handled? Deposits continue to be sent to each claimant’s financial institution, as previously directed by the insured. Those transfers are continuing to go through. Claimants will need to contact their bank or credit union for specific information about availability of those funds. If the bank or credit union is inoperative due to the hurricane, we can stop the future electronic payments and start sending regular checks through the mail to the insured customer at the address they provide. We can also stop sending checks temporarily if requested to do so.

  • Can I change the address my benefit checks are sent to? Yes. We are waiving the normal 10-day waiting period for changing a customer’s address. We can also stop sending checks temporarily if U.S. Postal Services (USPS) delivery to their address has been temporarily suspended. Customers can also provide a forwarding address to the USPS at a local post office or by going to http://ribbs.usps.gov and selecting “Change of Address” under the Quick Links section.

  • Will there be a delay in the delivery of my benefit check? There could be and we are extremely sensitive to this situation. Our check processing has not been interrupted due to Hurricane Katrina. However, we do expect some mail delays due to the disruption of U.S. Postal Services in affected areas.

  • Are alternate billing procedures being put into effect for impacted customers? We will continue to bill customers impacted by the recent tragedies, but are working to determine correct addresses and contacts. We are extending grace periods by an additional 60 days through October 31, 2005 for our customers who are located in the affected zip codes. This extended 60-day grace period through October 31, 2005 will also apply to those businesses located in areas declared a disaster by the Federal Emergency Management Association (FEMA).

  • What do I need to supply to get a claim processed/paid? We know that information regarding covered lives, beneficiary designations and amounts of supplemental coverage – all normally provided by the employer – may be difficult to obtain. We have developed contingency approaches for all of these issues and are working to be very responsive to each individual situation.

  • Is there an expedited process for submission of claims related to the events of Hurricane Katrina? Yes. Streamlined protocols for life claims have been developed. This specialized approach includes modified requirements for Life/Accidental Death and Dismemberment (AD&D) claims and temporary telephonic intake for Life/AD&D cases that do not already have that provision.

  • Will you continue insurance for employers who have to suspend operations because their space was destroyed? In coastal areas of Louisiana, Mississippi, Alabama and Florida, survival and putting lives back together is the top priority. For plan administrators or individual policyholders who are concerned about keeping their coverage inforce, no policies will be terminated in the impacted areas over the next 60 days. This is an interim step and may be extended as this developing situation warrants.

  • How will you execute RTW programs when there is no place to RTW? To be determined…. Currently we have a 31-day grace period, but it will most likely be extended to allow customers time to make payments. What that temporary, extended grace period will be has not been determined, but as soon as the information is available, we will communicate it to you.

Miscellaneous Information:

  • We have begun an outreach program that involves contacting planholders in the affected areas. We will track customers that are contacted and will ensure that all temporary residence information is secured. A plan is underway to develop a process for storm victims who have lost policies, bills, identification or any other supporting documentation related to claims processing. We are focused on providing customers with options but in the realm of ensuring that their information and assets are protected.

  • We have created one toll-free phone number that any customers impacted by Hurricane Katrina can call. A specialized CRU team has been created to manage these calls and to provide our customers with top-level service during such a stressful time.

We have:
    • announced appropriate extensions of deadlines for things like premium payments, receipt of medical info, and other time sensitive policy transactions such as conversion requests, etc.
    • announced toll free numbers, staffed 24/7, to assist claimants with filing or general information. In some circumstances, we are able to accept alternate proofs of claim, death or disability.
    • begun contacting claimants/beneficiaries to obtain viable methods of delivering benefit checks, where mail and direct deposit may be temporarily interrupted or suspended.
    • expanded EAP service telephone helpline, staffed with trained counselors 24/7, to help all residents of the Gulf Coast communities - membership in this coverage is not required.

Joe Malone, Munich American Re

The Life Committtee is pleased to have Bonnie Brazzell, Vice President of Eastbridge Consulting, return to speak to our association once again. Bonnie is a recognized expert in the area of Worksite Marketing who has been watching the trends in this market for many years. She has recently identified the "Groupification" of Worksite as a major trend, and we look forward to hearing her viewpoint on how this trend is impacting carriers and brokers.

We have also invited a panel of distinguished industry experts to share with us their thoughts and perspectives on a variety of current industry topics.

Last, but not least, the Life Committee will offer two "Let's Talk Shop" workshops where we can vent, question, discuss and try to solve some of the underwriting challenges and administrative issues that Group Underwriters face in today's competitive market. These workshops get high marks and rave reviews at each GUAA conference!

RATE WARS - Carol Muncil, ING Re

As a good actuary friend of mine once said, “When insurance carriers report their quarterly results, why is it reported that “the claims were higher than expected” when in reality the truth is that “the premium rates were insufficient?”

We all know that each company has its own tolerance level for profit or losses. There are insurance companies that are satisfied with creating their profits solely though the use of cash flow accounting. Other companies will pull back on their business plans and give up growth to remain profitable. Still others use group life as a loss leader to attract other group products.

How far will our industry stretch rate reductions for a sale? Is it until the company is forced to report negative earnings? Rating agencies are not forgiving and the investment community is even less patient. Experience shows that just one quarter of reduced earnings may be followed by a reduction in the company's stock price.

Now that the January 1, renewal season is upon us, it is advisable for companies to carefully evaluate cases for the worthiness of a price reduction.

Here are some underwriting principles to consider as part of that process.

1. Does the plan design stretch the limits of anti selection? Is the plan designed to primarily meet the needs of a select few?
2. Does the plan require no age reductions? Consider the ages of the impacted employees and the waiver of premium termination of benefits schedule.
3. Does the plan require the take over of inforce volumes that have extraordinarily high life maximums over the GI maximum? This is typical of voluntary life insurance. Determine how long the plan design has been in place and what the current GI maximum is.
4. Is the case being submitted by a new producer requesting an unrealistic plan design? Does the case have a lot of information missing on the RFP?
5. On smaller cases that have a rich benefit plan and high maximums, it may be a case that could produce negative results due to anti-selection.
6. If you see many poorly designed benefit schedules on cases that have been put out to bid from a single carrier, it may be a case that could produce negative results. Not all accounts are stellar performers and the company could be cleaning house.

Good luck to us all.

Carol Muncil is Senior Group Life Reinsurance Consultant for ING Re. ING Re is the reinsurance business of ReliaStar Life Insurance Company of Minneapolis, a member of the ING family of companies. She may be reached at carol.muncil@ing-re.com. The views expressed in this article are those of the author and not necessarily the views of ING.
Chief Editor | J.B. Hiers
Munich American Re
Managing Editor | Shirley Weaver
Munich American Re
Senior Editor | Tom Kirner
The Hartford

President | Mark Walker
Minnesota Mutual

Vice President | Phil Lacy
J.B. Hiers
Munich American Re
Kim Miller | Pacific Life
Carolyn Pollard | ING Re
Sky O'Callahan | Standard
Jim Wilmot | BCBS of Illinois
Ann Marie Wood | Anthem
Curt Zepeda | ING Re