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The Cost-Shifting Going On In LTC

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Houston, Texas

In the long term care insurance community, a cost-shifting is going on that hasnt gotten much press.

This entails shifting the costs for LTC-related technology and training to the distributors, according to Jean Garner, long term care specialist at Elite Marketing Group, Houston, Texas.

Speaking here at the Society of Actuarys 4th annual Intercompany LTC Insurance Conference, Garner was one of 4 panelists at an interactive session on “Agents: Are They Friends or Foes?”

The session title suggested the discussion would focus on LTC agents, perhaps from a company perspective. Yet, as it unfolded, the session focused more on how brokerage general agents and others in the field need carrier assistance in bringing technology improvements and training to LTC producers.

The expense costs are going “tremendously high” at BGAs, pointed out one panelist, Gary Katelman, the LTC division director at Senior Market Sales, Inc., Omaha, Neb. He attributed a lot of that to dealing with the service issues.

Training is another pressure, added a wholesaler from the floor, declaring, “the companies need to give BGAs and wholesalers the tools and resources to do the training.” And they need to make their message easy enough to sell, he said.

At one point, audience members took an informal poll about the most important issues they want insurers to recognize as being important to agents. The results, shown in the chart, put “underwriting” in first place, followed by “new business.”

Later comments reinforced that. Regarding underwriting, for example, someone in the audience suggested that carriers could help BGAs by inviting them into the home office for training on the underwriting guides. Then, the BGAs would be better equipped to help the agents, this person said.

Thats a good approach, suggested Garner. For instance, she said the decline rates at her firm are “very small, because we do look at the underwriting guide.”

Producers like hearing straightforward underwriting views, added Rob Brown, the panel moderator. He is vice president and chief underwriter at LifeCare Assurance Company, Woodland Hills, Calif. The panelists agreed.

If a case has serious problems, for example, “just tell the producer not to shop it, that it will be a decline. Agents appreciate that rather than being told to send it in and well look at it,” Brown said.

About new business, the quality of the applications being submitted is a “big issue,” said panelist Eric Holtzman, vice president of the LTC insurance division at Prudential Insurance Company of America, Livingston, N.J. “The apps need to be in order, and that is a big training challenge.The problems that come up require a lot of manual intervention.”

That means the “agents need a lot of training on what they need to do to get the business and process it,” said Holtzman.

The problems can range from information not filled out to failure to submit release forms and HIPAA authorizations.

But one agent was firmly against requiring anything that adds more paperwork. “Please dont make us get forms that really arent necessary and not required by state law,” she said. “And dont say we wont issue unless we get this particular form.” Reps dont want to go back to a client and get extra forms signed until the policy is issued, she said.

Other comments from the session:

Technology: “Carriers have forced agents to be technologically advanced,” said Katelman. “The home offices have worked to make that happen, but still some agents are using a rate book.”

Communications: “Agents often dont know who to communicate with, to solve their problems,” said Garner. People can always go to a Web site or send an e-mail, she allowed. “But many times, the agent doesnt know who to contact.”

Remember, said a man from the floor, people respond to different forms of communication. Whether dealing with a policy change, a status request or a claim being filed, the partnersagents and companiesneed to find out which way of communicating works best, he said.

Simplify. “We are here to sell to the end user,” said a woman in the audience. “So dont put a lot of hoops and hurdles in the process. This is something the carriers need to deal with.”

Materials. “We need more support and third-party materials, said a broker.

Training. Training is being pushed to the managing general agent and the BGA, because the carriers are not equipped to do it anymore, said an audience member. “So we need to show the carriers howthey (can) help us train” the agents.

Grow sales. A big part of making sales is to get agents to understand the need for LTC insurance, said Katelman. “Agents and BGAs need support from the home office on this,” he said.

One man mused that, in view of the discussion, the session title was wrong. “Agents are not friend or foe,” he said. “We need to be partners.”

Reproduced from National Underwriter Life & Health/Financial Services Edition, February 27, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.