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Dear Everyone!
I get a lot of mail from this fish-wrap... and the one thing everyone seems to like is... rumor and gossip.
One of the things I like about the insurance sector is that it is always so dynamic. New products come online, new techniques and technology help people better prepare for the future are developed, and these days everyone is talking about the insurance industry being the "next big thing" after we "get through" the so-called meltdown of the markets and the banks.
Still, it's impossible to get younger people interested in this industry because they have the misconception that it's a staid, stodgy, and boring old business. Nothing could be further from the truth.
Maybe some of the following will help convince you that this is not your father's or mother's financial industry anymore. If not, I'm sure you will at least enjoy some of the gossip.
If you know someone who wants to get into this business, have them call me. It is not easy, but it can be a "good deal" for the person with a little courage willing to work hard for their future.
-Al
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A Little Rumor... A Little Gossip!
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I thought that some of you might like to hear some of the scuttlebutt about what's going on behind the scenes in the health insurance biz.
Once a year most of the large insurance companies bring their road-show to Sacramento. This is a half-day set of lectures about new products they are bringing out as well as speeches on sales and motivation. A large carrier can draw several hundred agents if it puts together a good program and offers free continuing education credits for one or more of the lectures. (Food is a big draw as well!) Basically it's a big commercial for the carrier, but a lot of good info gets transmitted and received.
I went to the Blue Shield road-show at the Convention Center on Friday and out of the 250 agents that were there I ran into about three dozen I know. Agents by nature are not chummy the way doctors are with doctors and lawyers with lawyers because we all compete against each other with many of the same products. However, when we meet at the various dog-and-pony-shows (as they are called) that the carriers put on each year, we swap stories and rumors... most often about other carriers... not the one putting on the show!
There was a lot of buzz about the slow turn-around time of Anthem. Everyone is bitching about it. The Shield people also referred to it, saying that they have staffed up and while they are a bit slower than usual, they are not as bad "as that other firm that has just a slightly darker shade of blue" as they referred to their arch-enemy Anthem Blue Cross.
Like other agents, I have an angry client who has been waiting for three weeks for an adjudication of her case with Anthem. She said she may just enroll in Kaiser. She called them and they said it would only be a few days for them to approve her. (I don't believe that for a minute. If you think carriers lie to agents... you ought to hear what they say to prospective members! I don't write Kaiser individual because they don't pay a commission worth the effort.)
All the carriers are swamped with applications because of the economy. People are either coming off of COBRA or trying to avoid it. Another problem is that the carriers have hit their members with huge rate increases forcing many people to downsize their plans... all resulting in more paperwork. (You can often downsize your plan without medical underwriting. You can't move up to a richer plan.)
Anthem Blue Cross has been hit the hardest, perhaps because they are the largest. It is really hurting their reputation for service. Anthem was never the best or fastest but they were far, far from the worst... that distinction has resided with Health Net for many years now... and if what I hear from other agents, the trend will continue.
Health Net is going to lay off a ton of people, many in their computer department... off-shoring the work to India. Typical for Health Net... always a step behind. Most companies are bringing work home from India... because it just didn't work out. But in typical Health Net fashion, they are sending some critical functions overseas.
In the men's room (where you hear a lot of good gossip) I heard two guys talking about how Health Net is likely to be sold. Aetna might be a buyer but Kaiser would be a more logical choice since Health Net is primarily known (and was founded) as an HMO company. However, Aetna has money and Kaiser just loss almost a billion bucks.
Anyway, the slow-down in processing has hurt all agents and they are pretty grumpy about it. I have a 10-life law firm I'm working on. No way will I send it to Anthem. If they can't clear a clean individual case in two weeks (should take 3 days!) it will probably take them a month to issue a group plan! I don't mind losing a low-commission individual plan, but I'm not going to gamble on losing a group of 10 to a carrier who seems to have a service level at the breaking point right now.
Another issue that surfaced with Health Net is that they lost their "A" financial rating with Best (the rating company.) Some errors and omissions (E&O) policies will not protect an agent who writes for a "B" company. The policy I have will, but I wouldn't write with a "B" company if I could avoid it. Sometimes you can't... some life carriers who take a lot of what is called "impaired risk" (i.e. sick people) don't have an "A" rating... but that does not mean the company won't pay its claims... it just does not have the backing that an "A" rated company has.
Shield said they have made some huge investments in their online technology that we will see soon... bringing a lot of it in-house (they used a service company... EDS who was too slow to respond to broker needs) and they showed us some of their new innovations. They also showed off their new Vital Shield plans. The ones with the full Rx look pretty good... and are somewhat comparable to the Anthem Smart Sense plans. I'll know more when I see how they are priced.
All the carriers are looking for ways to sell plans at a lower price. Well, there is no free lunch... you have to cut corners on something. Usually it is drug coverage. They give you generics, but not name-brand. Or they have a huge deductible. Or they have a lower initial deductible but a huge out-of-pocket max with a low co-pay percentage (like 60%) until you reach it (after the deduct.)
Do I like those plans? Hell no. But if it means that someone takes Vital Shield or Smart Sense vs. going naked, I'll write the less-than-terrific plan every day.
The Blue Shield VP talked a lot about how they are a California-based not-for-profit company committed to CA... unlike "those other two large companies who shall remain nameless" that answer to stock holders and Wall Street (Anthem and Aetna.) They also mentioned that they didn't lose money like "one of those mid-west based companies did" nor did they pay their CEO a bazillion dollars last year.
It is no secret that Anthem lost a lot of money last year. A bunch of their Lumenos plans did not perform (that's insurance lingo for "make a profit") as well as they wanted. (That's also lingo for "they got the %$#@ knocked out of them!") Also Anthem is owned by Wellpoint which pays their executives huge multi-gazillion dollar salaries and bonuses. Several people said that if Anthem does not get a grip on their internal costs, they are going to go the way of Health Net... which is the yellow brick road to chapter 13!
I expected Shield to roll out a Lumenos-killer, but one of their major guys told me off the record that since Anthem got "killed" on Lumenos plans that have a ton of free preventative services, Shield didn't want to follow down that road.
Blue Shield knows they need a better pricing strategy with Health Savings Plan type policies and say they are working on it. My response is "when pigs fly." When it comes to bringing out new plans, Shield is not an industry leader. Anthem has always held that title... perhaps because they have always been the largest and have had the most cash. They can afford to experiment.
One thing that shocked me is that the Shield VP said out loud that the company will support a guarantee-issue plan with a mandate. If the government mandates that everyone have health insurance (like they do with car insurance) Blue Shield said they will not oppose it... which means to me that they already have a plan ready to go... or have at least done the research. I never heard that from any other carrier before. I wonder how their pals at Aetna, et.al. will feel about it. Individual coverage is the major cash-cow for most carriers to milk and none of them want to put that cow out to pasture.
I ran into a friend who is very active with the major health insurance lobbying organizations. She said she is off to D.C. next month and is optimistic that some kind of reform can be enacted that will keep the private insurance sector as a player. I told her that I wanted a hit of what she was smoking!
The keynote speaker gave a presentation on how agents can increase their business. However it was the same speaker and the same presentation he gave to a recent agent gathering in Sacramento and it was not so good the first time and didn't get better with age. A lot of the agents who had heard it before went into the foyer to gossip or talk to the Shield people at the tables.
They raffled off a half dozen Apple iPods. I didn't win one.
Shield finally has a new stand-alone dental plan. Anthem has had one for a long time, but if you wanted Blue Shield dental you had to buy their health plan. They did a long slide show about it. No one was all that excited about it... agents know there is not much money to be made in dental (or vision) when you consider the time it takes to explain all the different plans and options. But I gave Shield credit for making a big pitch about it.
Delta Dental is the leader for group dental and most agents just go with that. The commissions on dental and vision (i.e. VSP) are so low, most agents don't make a big effort to sell it... unless the boss wants it for his people. These days only the large, rich companies (think Intel) or government entities take these ancillary products... and a lot of them are cutting them out... no money to afford them.
Of course Blue Shield had tables staffed with some of the actual members of their different teams to answer questions, etc. I think this is what most of the agents really come to these things for... as you get to meet the people who actually do the work... the agent-support people we talk to on the phone, the claims people, the member-services gals, the computer guys, etc. If we get some kind of national health care, these are the people who will probably be out of a job (along with agents.) At Blue Shield at least 90% of them who came to the show were women. That rather surprised me.
The people from all the departments had pens and other gifts... the hand-sanitizer spray-pens were the big hit and went very fast along with the eye-glass cleaning cloths. I know some agents come to these events and go home with enough pens for the entire first grade at their kid's school!
The VP of sales said that Shield has one of the best commission plans in the industry. I didn't understand that as I don't see it as any different from Anthem... nor did anyone else I spoke to.
Most home-office people have no concept of what it is like to live on 100% commission, as-earned (paid monthly.) They get a check twice a month whether they do a good job or not. It is part of the frustration that agents have when they can't get home-office people to get off their butts and get the info we need to close a case. A lot of agents think that home-office people (in all insurance companies) are far too busy doing their nails or bidding on e-bay to do their real jobs!
It was a good "dog and pony" show. Everyone who spoke had high energy... except the vapid keynote speaker. They had box lunches... but believe it or not it was quite good... a chicken sandwich on couisants, with bacon and onion and tomato... a huge cookie, Mrs. Vickers chips, and a bowl of fruit. No one complained... but people felt there should have been coffee and pastry before the show.
The message was clear. Shield is committed to growing their business at the expense of Anthem and Aetna. They mentioned no names, but they pulled no punches (aimed at them both.) They say their pricing on their group plans have the other carriers on the ropes and with their new Vital Shield plans, they say they are going after a larger slice of the individual marketplace pie. They even hinted at a change in their notoriously difficult underwriting coming up... but I don't think anyone believed them. I know I didn't. What was noticeable is that they didn't send anyone from underwriting. It was probably a security concern!!! (Underwriters are "hated" by agents!)
I got the impression from everyone who attended that it was time well-spent. (When agents are at these things it is time lost from selling.) Shield had a good Q&A session and all of the Shield people (there must have been about 50 of them) seemed very interested in getting feedback from brokers... especially the member-services gals.
One thing I can say is that Anthem really needs to take the money away from their top management and invest it in their infrastructure because everyone I spoke to remarked about how Anthem's service level to agents has gone into the toilet... long hold times on the phones for agents and members and especially the long adjudication time.
No one could figure out how a company with the huge resources that they have could have been caught so flat-footed and off-guard such that they can't answer a call or turn a case like they used to.
One agent told me that Anthem was becoming the General Motors of the industry while the smaller, more nimble Shield was becoming the Honda. I don't know one agent who drives a GM car.
While everyone was all smiles, there was also a bit of tension. Agents and carrier-staff alike know that the next six to twelve months will decide if they will still have a job or a business next year. Since many of the agents only do health... but know I balance my practice with life and disability and long term care... asked me how to get into those fields. They may not yet see the light, but they are starting to feel the heat.
I got the feeling that everyone in the room knew, but would not admit, that the good ship USS Health Insurance was taking on water and could not be saved and it was time to get into the life boats before it went down.
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Well, that's a wrap for this issue. I hope you've found some of the info above useful and interesting. If you have questions about life or health coverage, safe-money annuities, or employer group benefits just give me a call or send email.
Sincerely,
Alan N Canton
InsuranceSolutions123 Agency
InsuranceSolutions123.com
916-962-9296
CA License # 0F31110
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Al Canton, Owner
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I'm Al Canton, owner of the Insurance Solutions Agency.
Everyone promises the best service, etc. So I won't bore you with that message.
Bottom line, I know health insurance, disability, Medicare, life, and annuities.
Most importantly, I'm honest. I will not put you in a product just for the money. I've lived in the Northern California area for 35 years and I've built my reputation on integrity and honor.
It's that simple.
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