By

Miami

Disability insurers should be trying to do more than just trying to get by.

Drew King, president of JHA Inc., Portland, Maine, a disability insurance consulting firm, urged executives here for JHAs 12th annual disability conference to “take the road less traveled” and find ways to adopt a longer-term approach to building customer relationships, sales and profits.

“We improve the lives of millions of people every day, whether they ever submit a claim to us or not,” King said. “We must demand an adequate return for the risks we take.”

Disability insurance executives should ask themselves whether shifting to a longer-term outlook and pushing for adequate profit margins might not help them avoid the kinds of moves that have led to recent waves of bad publicity about claims handling practices and allegations of bid-rigging, King said.

To improve consumers attitude toward disability insurance, “weve got quite a hill to climb,” King said.

Another general session speaker, Robert Bates, president of Benefit Partners, Omaha, Neb., a unit of Jefferson Pilot Corp., Greensboro, N.C., agreed on the need for disability insurers to do more than accept their current modest profits.

At Benefit Partners, “weve concluded that the sales environment is difficult and that that is permanent,” Bates said.

Once employers get used to shifting responsibility for paying for disability insurance to employees, theyre unlikely to take that responsibility back, and some scenarios suggest that current low interest rates, which hurt earnings on disability insurers investment portfolios, could last for a long time, Bates said.

Some of the keys to prospering in the current climate include pursuing either a high-end strategy or a mass production strategy, rather than staying in the middle and hiring enthusiastic, skilled employees who will care enough to do things right the first time, Bates said.

The leaders in almost any industry “didnt do it by saving the paper clips,” Bates said. “They did it by having the right strategy.”

To emphasize the need for disability insurers to find tools other than prices to set themselves apart from one another, JHA brought in Joe Calloway, a Nashville, Tenn., author of books about strategies businesses have used to get customers to think of the businesses as being one-of-a-kind operations.

Calloway noted that he is loyal to his current disability carrier partly because excellent service from the carriers agents differentiates that carrier from its competitors.

To drive home the need to avoid complacency, conference workshop sessions included a look by marketing executives from Hartford Life, Simsbury, Conn., at the dismal state of consumer disability insurance literacy and several workshops that analyzed the perils that face disability insurance underwriters.

But King said there is some reason to be hopeful about the disability insurance industry.

Many insurers in the market have done all right over the past year, and some disability industry indicators, such as group short-term disability rates and group long-term disability rates, are heading in the right direction, King said.

Elsewhere at the JHA conference, participants who sell services to disability insurers said their business has been good.

David Fisher, president of PsyBar L.L.C., Minneapolis, said his firm has been doing more independent medical evaluations for disability insurers. “Companies have shown a pattern of wanting to very thoroughly investigate claims.”

New tests can help psychologists and psychiatrists do a better job of coming up with objective assessments of how severe psychological disabilities are, how hard claimants are working to get better and whether psychological problems are aggravating physical disability causes, such as chronic pain, Fisher said.

Drew King, president of JHA, Inc. told disability insurance executives, “We must demand an adequate return for the risks we take.”


Reproduced from National Underwriter Edition, March 10, 2005. Copyright 2005 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.