Articles
This first article addresses some of the key reasons why P&C
Companies are moving this way.
This second article is a listing of some of the steps that should
be taken in the development and implementation of an Integrated Disability Program.
Watch for new articles added and services
exclusively provided for P&C Companies.
Miele Consulting
One of the most respected names in group
disability reinsurance
157 Foreside Road Falmouth, Maine 04105
(207) 781-9069
Fax (207) 781-2053
Click below to return to home page
Miele Consulting
One of the most respected names in group
disability reinsurance
157 Foreside Road Falmouth, Maine 04105
(207) 781-9069
Fax (207) 781-2053
Click below to return to home page
Miele Consulting
One of the most respected names in group
disability reinsurance
157 Foreside Road Falmouth, Maine 04105
(207) 781-9069
Fax (207) 781-2053
Click below to return to home page
Miele Consulting
One of the most respected names in group
disability reinsurance
157 Foreside Road Falmouth, Maine 04105
(207) 781-9069
Fax (207) 781-2053
Click below to return to home page
Miele Consulting
One of the most respected names in group
disability reinsurance
157 Foreside Road Falmouth, Maine 04105
(207) 781-9069
Fax (207) 781-2053
Click below to return to home page
Miele Consulting
One of the most respected names in group
disability reinsurance
157 Foreside Road Falmouth, Maine 04105
(207) 781-9069
Fax (207) 781-2053
Click below to return to home page
Miele Consulting
One of the most respected names in group
disability reinsurance
157 Foreside Road Falmouth, Maine 04105
(207) 781-9069
Fax (207) 781-2053
Click below to return to home page
Miele Consulting
One of the most respected names in group
disability reinsurance
157 Foreside Road Falmouth, Maine 04105
(207) 781-9069
Fax (207) 781-2053
Click below to return to home page
Miele Consulting
One of the most respected names in group
disability reinsurance
157 Foreside Road Falmouth, Maine 04105
(207) 781-9069
Fax (207) 781-2053
Click below to return to home page
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The following articles are
for P&C
Companies who underwrite
Workers Compensation Insurance and are considering entering the Integrated Disability
business.
Key Motivating
Factors
The following are key reasons why P&C Companies are moving into the Integrated
Disability business.
Leverage existing WC disability claims organization –
Particularly in the experience rated segments of the non-occupational disability market
and employer groups of size 2,500+ the most important driver of the price of coverage is
the claim management ability of the carrier. The primary tools of claim management involve
preventive and active claim management efforts that WC carriers have been actively using
to manage occupational claims for many years. In fact, the intensity and pervasiveness of
return to work efforts in the WC business is well ahead of the comparable efforts on the
non-occupational side. Particularly with blue and gray collar risks the superior claims
management tools of WC carriers has strong potential to place them at a competitive
cost advantage to most of the carriers in the non-occupational business. This
cost advantage can translate into more competitive pricing and higher profit
margins.
Leverage existing customer base – Writing non-occupational
disability coverage offers great opportunity to provide an additional revenue stream from
a WC carriers existing customer base. Why leave money on the table for someone
else? In addition, the lack of a non-occ. program can make it easier for
someone else to come in with one and replace your WC cover.
Expense efficiencies – By writing non-occupational coverage on an
integrated basis with WC coverages certain expense efficiencies related to integrated
administration of claims and integrated marketing can further extend the competitive cost
advantages of a WC carrier.
Cost reduction due to avoidance of double dipping – WC carriers
are in an optimal position to avoid duplicate claims being filed on both the WC and group
disability side. In this way offsets for WC payments can be maximized and costs reduced
yet further.
Market Demand – As can be easily demonstrated by attendance at
RIMS or related meetings, the 24 hr. or integrated benefits concept is one of the hottest issues today in the large employer marketplace.
Being able to market integrated non-occupational and occupational disability programs will
differentiate a WC carrier in the marketplace, and may lead to additional WC sales as
well. Alternatively, if this capacity is not developed WC carriers risk losing valuable
business to those carriers that are able to market integrated benefits.
Joint ventures offer inexpensive entry into the market – By
partnering with an A&H Company, a WC carrier can outsource many of the elements they
need to provide a non-occupational disability program but are currently missing. Functions
such as underwriting, actuarial/pricing and financial, claim adjudication (complementary
to existing operations), contract/compliance support, and product development support and
training can be provided by the joint venture partner. Joint venturing facilitates more
rapid and less expensive market entry vs. going it alone, and can also be a first step to
a WC carrier entering the market and developing expertise in the non-occupational side of
the business.
Examples of peer success – A review of the top 10
non-occupational disability carriers based on the recent John Hewitt & Associates
(1997 mid-year) disability market survey reveals that 4 of the top 10 carriers are
significant players in the WC business. These companies include CIGNA,
ITT-Hartford, CNA and Liberty Mutual.
Liberty Mutual – Liberty deserves special comment for a few
reasons. First, Liberty is the largest WC carrier in the United States on many basis of
measure, and has held this position for many years (60+ according to promotional
materials). Secondly, as recently as 1994 Liberty had only small amounts of
non-occupational disability business on the books. By marketing their claims management
ability and building a non-occupational organization from scratch Liberty was able to grow
their block of business from approximately $10 million in 1994 to over $150
million in 1997 (this excludes premium equivalents from ASO business, if you
include those the total is in excess of $200 million). This example illustrates the market
potential for a WC carrier entering the non-occupational market in an aggressive manner.
Market Size/Potential – In 1996 the non-occupational disability
market was approximately $10 billion in size. This excludes the value of sick leave and
salary continuance programs, which are embedded in payroll costs. 1996 research indicates
approximately 70% of U.S. companies provide some form of disability coverage. A study by
UNUM indicates that LTD penetration is much lower, closer to 50%. Most traditional
non-occupational disability writers have focused their marketing efforts on white collar
and gray collar risks, leaving the market penetration for many of the risks that W/C
Carriers handle extremely low. In other words, this is an immature market with
many segments virtually untapped.
In summary the non-occupational disability market is a great opportunity to
leverage existing resources by a WC writer, joint venturing allows quick and inexpensive
market entry, and there is substantial growth opportunity in the market.
Scroll down to next topic or click below to return
to
Table of Contents
Integrated
Disability TO DO List
You have made the decision to enter into the expanding integrated disability arena by
developing your own group disability product rather than partnering with another carrier.
This is a crucial decision as recent history shows that joint ventures have a much greater
chance of failure than a company who undertakes the entire package. Now, the goal is to
make the transition as effective and efficient as possible to insure a positive reception
in the marketplace without sacrificing profitability.
There are similarities that can be drawn between the occupational and non-occupational
disability products. They are employer sponsored programs involving periods of disability,
claims management and return to work measures. Though some common issues exist the
administration is very different and must be identified as early in the process as
possible to prevent any delays or problems. Even terminology can be confusing as each
discipline uses the same word but applies a different meaning.
The following outline defines the initial steps necessary to
develop and implement an integrated disability product and the issues to consider and
address through the planning process.
Select product development team
- Find product champions
- Develop necessary skills
Identify Goals and Objectives
- Business retention
- New business acquisition
- Customer service
- Lower absence costs
- Disability case management
- Seamless administration of occupation and non-occupational disability
- Disability reporting and case management
- Minimize absenteeism
- Promote productivity
- Promote return to work
- Claim reporting
- Loss information
Develop Business & Project Plans
Establish project management plan to identify each step with resources
needed, time/cost estimates and target dates (include contingency planning)
Consider outsourcing when internal resources are limited and where to
get them
Determine accountabilities and get buy-in
Prepare feasibility report for senior management, include cost/benefit
analysis and return on investment for go/no go decision - communicate organizational
commitment
Implement plan, monitor and report progress
The following are things to consider and address in the
planning process.
Review States with Mandated Short Term Plans
- Determine how to handle STD in these states
Determine how to handle self-funded STD programs
Map out workflow for both occupational and non-occupational
processes
- Document differences
- Identify terms and know differences
Develop models and address issues for all the following
areas:
Compliance
- Develop disability contract and certificate
- Benefits vary from employer to employer; benefits not state mandated
- Many plan options available
- Delivered to each employer or employee
- Know filing requirements
- Actuarial memorandums
- Filing requirements vary by state
- Resolve state objections
- Prepare and mail filing packages to each state
- Very timely process begin early
- Legislative issues and keeping current
Claims
- Single point of intake; 800#
- Claims administration and coordination
- Data gathering and reporting
- Disability management
- Systems requirements
- Develop workflow and procedures
Underwriting
- Identify what makes a good risk for each product
- Identify information needed to quote
- Identify quote workflow and develop forms such at Request to Quote
- Develop quote materials such as proposal format and wording
- Develop sold case underwriting procedures
Marketing
- Need to train sales force - selling techniques
- Internal product training
- Need marketing materials such as brochures
- Develop plan of rollout to field
- Identify pilot offices
- Develop marketing strategy
- Target in-force accounts?
- Consider transferring Home Office Plan to new product as 1st case
Communications (Internal and External)
- Get buy in from all levels of management
- Effective internal communication is key to buy in from all employees and critical for
success
Systems
- Management and reporting systems
- Real time reporting
- Accuracy
- Must be analytical to aid client management in decision making
- Internal requirements
- Track production
- Capture sold case data
- Billing requirements
- Statistical reporting requirements
- Management reports
Billing
- Determine billing cycle
- Determine billing methodology
- Determine billing format (one bill or separate)
- Disability billing based on monthly enrollment
Actuarial
- Determine expense loadings and pricing
- Prepare actuarial memorandums
- Develop method for capturing data for statistical reporting
- Prepare statistical reports
Sold Case Processing
- Disability reviews sold case before binding coverage
- Develop process for issuing contracts and certificates
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