Jump-Start 2003 LTC Business With These Questions
Long term care insurance carriers, distributors and producers all seem to be facing the same challenge at the same time. Do we grow or shrink? Do we specialize or broaden our base? Do we invest or cut back?
With the uncertain economy, a rising and falling stock market, and past mistakes now coming back to bite the industry, these are very important questions to ask. Their answers may help jumpstart LTC business for the entire year and beyond.
Lets take a look at why, starting with the issues for carriers. I believe the days of the highly specialized “boutique” LTC insurance carrier are coming to a close. The eventual consolidation of this industry has begun, making it very hard for boutique players to compete against the Wal-Marts and Coca Colas of LTC.
For smaller carriers to exist, grow and prosper at all, they must develop niche products for sale by specialty agents. These products must be built on very strong actuarial assumptions, and outsource much, if not all, of the “back room” services to efficient experts in those areas.
Even the biggest carriers are going to have to become a lot faster, smarter and more “modernized.” This will be necessary not only for them to continue to compete for market share but also for them to be profitable.
At the same time, the Wall Street analysts will continue challenging the carriers on results for what the analysts believe is a highly volatile product line. Carrier leadership will need to convince those analysts that management knows what it is doing, that the company is not taking extreme risks, and that profits can and will be generated long range.
In short, there will be no room for flying by the seat of the pants. To ensure that doesnt happen, LTC insurance carriers must be big enough to invest in the three Ts–talent, technology and tenacity–to aid sound decision-making. An occasional visionary on this side of the equation wouldnt hurt either.
Finally, carriers in this market need to continue to share data and experience, but on an industrywide basis. The way many are doing this now is by letting their best talent become the “temporary help” of the industry. This must stop. Talented leaders need some breathing room to build. If carriers dont allow this, they might as well fold up their tents and go sell final expense policies and stop muddying the industry waters.
On to the distributors. They face many questions in todays market. Here are some of the common ones I hear:
Should we represent many carriers, a few or just one? Roll up other small agencies or go it alone? Stay with one product line or add on complementary lines? Go national, regional or stay local? Look for a buyer or continue to grow solo? Create an exit plan for current leadership or bring in new folks to take over?
Watching the “bottom line” has never been more important for LTC insurance distributors than in todays tough economy. That is no reason to avoid conscious risk taking, however. In fact, now may be the very best time for distributors to take on some new risks, especially if existing approaches are not working very well.