Writing Business That Sticks for More Than a Year

[JackJaw]

Guys,

I see in many of your health posts that some of you focus on writing business that stays on the books for multiple years instead of replacing yearly. Wait-maybe I just insulted half the board-but I think we all want to do that.

I understand that the goal should be writing long term business, but are there certain companies that don't raise rates as often as others or do you pre-sell the client on rate increases?

As a newbie I would appreciate any areas of the selling process that would help achieve this goal.

Thanks,

Jack

Example from one of Somarco's posts:
" Bitnis, buying health insurance is a lot different from marketing it. Several of my clients bought plans for years and changed carriers almost every year.

That was before they met me.

Now they buy once and keep it for years in most cases."

 

[somarco]

The key to writing business that sticks starts on the front end. You need to take the time to educate prospects on what they have, what they should have, and where to get the most bang for their buck. Once they understand that $2500 copay plan has as much, if not more, exposure on a large claim than a $5000 HDHP 100% plan it is then a matter of helping them understand what they are not getting for their extra $200 - $300 per month in premium.

Here is an example of a recent prospect. Male 55, female 39, female 14.

Aetna wants $689/mo for a $2500 copay plan. The $5000 HSA is $412.

Trick is to get them to look at their plan in a way they never have before . . . from the perspective of a large claim.

I always say, "Let's see what happens under your plan when the truck runs over you and you end up in the hospital with a $100,000 claim."

No one believes they will get sick, but all they need to do is watch the evening news to know auto accidents can happen to anyone.

The $2500 copay plan has $5,000 OOP (including the deductible) plus copays.

The HSA has $5,000 total out of pocket.

Premium difference is $277 per month, over $3300 per year.

Which is a better value?

The lightbulb goes on.

I never talk about the HSA, or taxes, only health insurance concepts and plan design. About 90% of the time they end up buying the plan I suggest. To switch to anything else, with me or another agent, will cost them a lot of money.

Once they are on this for a few months they no longer have the money available to switch to a higher premium plan.

It is all about educating them and less about "if I can save you money will you buy from me?". Too many agents show them either the same coverage for a few dollars less, or trick them into buying lesser coverage (no Rx, annual caps) on the idea they don't really need to pay for those items since they never get sick or take meds.

Most of my clients buy once, from me, and we never have to make a change. I might switch 2% of my renewals in any one year. Most stay put.

 

[Crabcake Johnny]

Most people don't want to switch - they don't want to go through the entire process again. Also, a new 2 year review period starts every time they switch.

It's also jumping out of the frying pan and into the fire - just letting your clients know that all carriers increase rates.

That said, you're going to some some PO'd clients who want to move when they get an increase and I'll help those shop for another carrier.

 

[JackJaw]

The key to writing business that sticks starts on the front end. You need to take the time to educate prospects on what they have, what they should have, and where to get the most bang for their buck. Once they understand that $2500 copay plan has as much, if not more, exposure on a large claim than a $5000 HDHP 100% plan it is then a matter of helping them understand what they are not getting for their extra $200 - $300 per month in premium.

Here is an example of a recent prospect. Male 55, female 39, female 14.

Aetna wants $689/mo for a $2500 copay plan. The $5000 HSA is $412.

Trick is to get them to look at their plan in a way they never have before . . . from the perspective of a large claim.

I always say, "Let's see what happens under your plan when the truck runs over you and you end up in the hospital with a $100,000 claim."

No one believes they will get sick, but all they need to do is watch the evening news to know auto accidents can happen to anyone.

The $2500 copay plan has $5,000 OOP (including the deductible) plus copays.

The HSA has $5,000 total out of pocket.

Premium difference is $277 per month, over $3300 per year.

Which is a better value?

The lightbulb goes on.

I never talk about the HSA, or taxes, only health insurance concepts and plan design. About 90% of the time they end up buying the plan I suggest. To switch to anything else, with me or another agent, will cost them a lot of money.

Once they are on this for a few months they no longer have the money available to switch to a higher premium plan.

It is all about educating them and less about "if I can save you money will you buy from me?". Too many agents show them either the same coverage for a few dollars less, or trick them into buying lesser coverage (no Rx, annual caps) on the idea they don't really need to pay for those items since they never get sick or take meds.

Most of my clients buy once, from me, and we never have to make a change. I might switch 2% of my renewals in any one year. Most stay put.

Cool.

In your example, does it matter whether or not they fund an HSA? Seems like the HSA info I've seen has been to focus on the clients who can afford funding the extra savings into the HSA account.

(I myself funded an HSA account through a group plan I had the last few years.)

Also, I see that some of the non-hsa plans offer 5-10K deductibles. Some of those (high deductible non-hsa) plans offer the choice of Dr visits with copays or no-Dr-visit copay coverage to save money. Does it make a difference whether they do that vs. the HSA/HDHP or is that 6 of one and 1/2 dozen of another? Or is that middle ground too technical and a source of confusing the client?

thanks again,

Jack

 

[Frank Stastny]

I think it is safe to say that agents who educate their prospects and clients are much more successful than agents who simply only look for prospects to sell insurance to. In my experience I have found this to be true regardless of what kind of insurance the agent has to offer.

 

[TristanTLC]

some carriers allow longer term locks, but the initial premium is higher. Assurant's plan, although not nearly as comprehensive as some other carriers, allow for up to a 3 year lock in rates. If you are concerned about rate increase, this is a nice added feature to have up your sleeves. I'm sure there are other carriers that do this as well.

 

[Crabcake Johnny]

....until you have to explain the 75% increase moving into year 4.

 

[somarco]

Penn Mutual played this game with a 3 yr rate lock several years ago and lost. Wrote a bunch of business then promptly lost it all at the end of 3 years. There were a few smaller players that also offered 2 yr rate locks but they are no longer around.

In most places in GA, Time is 15%+ higher than other carriers for comparable plans. Add another 10%+ for multi-year rate lock and it is impossible to justify paying 25% or more for the same plan with someone else just to say your rates won't increase for 3 years.

 

[dgoldenz]

The only time I have seen the Assurant 3-year guarantee work is when someone is 61 or 62 and the premium will lock them in until Medicare eligibility. Those cases are few and far between though. As others said, their premiums in most areas are through the roof compared to other companies. Seems they are only competitive in a few major metropolitan areas.

 

[InsureGuy5]

Premium increases can't be avoided and most people shop everything on price - even though they may not be getting a good deal in the long run. One step to maintain clients is to suggest a rider that will lock in their rate for multiple years.