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17 minute read
In this episode of the Insurance Innovation podcast, join Alan Edgin and Andrew Bard, CEO of Optimed Health as they discuss the ever-changing landscape of the health insurance industry.
The discussion will fuel your thinking around how carriers, brokers, and distribution partners can thrive in this dynamic environment. Andrew discusses efficient distribution, maintaining distribution focus, driving persistency, and very topically, the use of AI to find signals, and enabling agents with data.
Insurance Innovation, brought to you by e123 - the premiere life and health distribution management system.
Episode Transcript:
Narrator
Welcome to e123’s Insurance Innovation Podcast where you'll hear tips, tricks and techniques for improving sales, improving profits and achieving operational excellence. Each episode features an executive guest with a perspective to share, an interesting story and great examples for you to think about. Please give us feedback on the show or talk to us about your Distribution Management System needs on our website at e123insurtech.com. And now, here's our host, Alan Edgin.
Alan Edgin
Welcome to Innovators Circle, our new series that focuses on the core issues of how to innovate, how to use data to innovate, and what the future holds. Today's guest is Andrew Bard, CEO of Optimed Health. Andrew helps carriers, brokers and distribution partners around the globe thrive in the ever evolving health insurance industry. Prior to leading the OptiMed team, Andrew was president of Tokio Marine’s HCC's Medical Insurance group. He worked with over 8000 distribution partners in 79 countries and led the transformation from a small family owned general underwriter to one of the largest providers of international medical insurance. Andrew, thanks for joining us today.
Andrew Bard
Thanks for having me. That's quite an introduction.
Alan
I appreciate it. Well, it's certainly deserved. You're one of the good guys in our industry, so I really appreciate you joining us.
Andrew
Thank you.
Alan
So tell me, Andrew, what markets do you serve in the individual space?
Andrew
We serve individuals and families in the under 65 [market]. We do not participate in the over 65 market, so everything that we're doing now is under 65. Individuals and families.
Alan
What kind of products do you offer?
Andrew
We've got a pretty large suite of products - fixed indemnity, MEC, health share, limited med plans, dental, critical illness, AD&D, accident/medical, and non-insurance services that are kind of bundled in with or added on to those products that I just mentioned.
Alan
So non-insurance? Like a telemedicine product or something?
Andrew
That's correct, yes - RX, telemedicine, advocacy.
Alan
Yeah. It looks like you run the gamut. Do some of those products - do they run in cycles where one for particular product like a fixed indemnity or short term medical is popular one year and then not so much next year. Or is it pretty consistent?
Andrew
Yeah, it's a really interesting dynamic in our market where products will become very popular and then maybe a new product comes out that competes with it, and it loses its luster. I think Short Term Medical is probably a great example of that. When I started in the individual health space, Short Term Medical was the gorilla in the market? Everybody was buying individual plans, buying a Short Term Medical. And now it doesn't seem to be that way. I think probably a number of factors out there, but as products. The product suites of these various carriers and TPAs have changed. It certainly changes the popularity of specific plans.
Alan
So what's happening in the individual health business today?
Andrew
The market is very fluid, kind of building on what we just talked about. It's ever changing needs from the consumers. New products come out and things shift back and forth with what products the consumers want and what's being offered. I think accessibility to products has probably grown over the last ten years, which is good. It's good for consumers, it's good for TPAs, it's good for technology providers, good for carriers. So that is certainly helping with the market. I think the other thing that changes quite a bit depending on who's in office in DC or in the state capital is the subsidies in the exchange products has really fluctuated over time.
And that certainly has a one to one impact on this business that we're in.
Alan
Yeah, I agree totally. And that's the one thing we've always learned being in the business for a while is that legislative risk is always real. It can change what products you offer from year to year.
Andrew
Absolutely.
Alan
You mentioned the products, and most of those products that you're selling have been around for quite a while. The short term medical, the fixed indemnity or the limited medical. And the more what I would call ancillary products, the AME’s [Accident Medical Expense], the AD&Ds [Accidental Death & Dismemberment], the CI’s [Critical Illness]. So what products would you if you had a crystal ball, would you like to see carriers to develop and enhance your business?
Andrew
Yeah, again, this is ever changing. But I think if we are looking at what the market needs, what the consumer needs, I think you could break that down into a couple of areas. One is products that are affordable. I think, as everyone who's listening to this would agree, the cost of care has risen sharply, essentially forever. And that puts pressure on the premiums, what the consumer has to pay from an insurance perspective. So coming up with affordable products is very important. Coming up with products that can counteract the increased cost of care but also be affordable is really kind of the golden ticket in my estimation.
I think products that have great access to care are important and certainly one of the things that changed during COVID and everyone being at home is telemedicine. It's become much more prevalent than it was three, four, five years ago. And getting those incorporated, those benefits and access incorporated into plans is very important.
Alan
Yeah, it's a little bit of a sticky wicket because people are obviously living longer. The technology is vastly increased in the last 30 years. The average life expectancy now is in like the low 80s, late seventies thirty years ago, it was in the 60s. With that comes a lot of cost to live that long. And then doctors are in kind of what I call defensive medicine, where they don't want to get sued, so they're ordering lots and lots and more tests than they did, say, 20 years ago, which increases cost of medical services, and it goes all the way down the food chain.
The doctors have to pay more for malpractice insurance. They have to charge more for their services. And so it's not a death spiral, but it's surely something that needs to change. So let's change a little bit and talk about how you distribute your product. What is your distribution today?
Andrew
All of our distribution, or what we would refer to as third party agencies, mostly call center agencies throughout the country. We do not do any direct to consumer sales today. We don't have a website - where we're going out and aggressively bring consumers into us directly. We love the agent market, the broker market. I think that's the most efficient way to distribute products. And that's squarely where we have positioned ourselves.
Alan
So do you work at all, Andrew, with any of the what I call kitchen table agents that are the old fashioned calling and knocking on doors and seeing the prospect face to face? Do you do much business with them?
Andrew
We don't for a couple of reasons. One, we're pretty new into this space, and we try to be laser focused on one specific aspect of the market, and that was the call center market. We will evolve and change over time. So what I would refer to as maybe a traditional insurance agent is something that we've talked about - mostly because I don't know that that is a long term growth model, just to be fair. A lot of policies have been sold that way over the years. But I think, as we talked about, technology is changing. The demographic of who you're selling to is changing.
My dad still has an insurance agent. He goes into his office every month and pays his bill via check. That's not really what is happening to the younger generation now. They want everything on their phone, via email, via text, ease of use for them. Think the younger generations understand and appreciate that time is very valuable. So getting in a car and driving to somebody's house really isn't the way the market is going, I don't believe.
Alan
Yeah, and you're absolutely right again. 20 years ago, 30 years ago, you had agents going and seeing people face to face on appointments. And now that agent can be in an office and reaching out and you can do web videos and probably make two or three times more sales than they could make if they were driving somewhere and coming back to the office and going somewhere else. Andrew, have you tried, innovating, with your distribution, like, with unique commission models or advances? Anything new and different?
Andrew
Yeah, I would say yes to both. I don't know necessarily that they're new and different compared to our competitors out there, but we are constantly looking for more efficient ways to incent agents and brokers to provide great products to consumers via us. I would much rather them access us as a TPA than our competitors. So we are constantly looking at ways to do that. Bonuses tied to persistency, for example. We're always open to those. Persistency is a very important topic, and I'm sure we'll get to that at some point during the conversation.
But as I look at bonuses, incentives, I think tying it to persistency is very important. As inflation has gone up, everything's become more expensive, from gas to groceries to vacations to airplanes. So I think there is some pressure in the distribution market on how much commission is being paid, how much people are making, because every family is spending more today. So there is pressure to increase commissions to the agents and brokers. So we are doing quite a bit of work trying to come up with innovative ways that we can do that but also controlling the cost to consumers which is at times in competition with one another. And our way of doing that is really with persistency we want consumers that have a product that they can use, they can access that they believe is important. And that increases persistency over time and it's very important to us and to everybody out there.
Alan
I couldn't agree more. So a term that's near and dear to all of our hearts in the insurance business is cost per acquisition and that's kind of the secret sauce and if OptiMed can get their CPA in line and your downlines can do the same and then it works really nice. So do you provide leads to your downlines or do you leave that up to your downlines to create and work their own leads?
Andrew
Today we leave that solely up to the agents and brokers. I think that is core to them. They are very good at that and it's obviously very important to their model. So today we do leave that up to them solely. We do have a project that's kind of midway through where we are going to start generating leads to our key distribution partners. It's actually a model that - it was started years ago by this local company here in Indianapolis called International Medical Group. They realized that they had traffic to their websites that were looking for their products.
\But they also realized that their agents and brokers are core to their ability to thrive in the market. So they created this program called Your Share program. They recognized that they had consumers wanting to buy their products that were coming directly to their website. And so they went out to their distribution and said, you are much better at this than we are, and so we're going to start sharing these leads with you. And I believe it did a couple of things. One, it got the consumer the products they needed by somebody who's trained and good at selling the right product to them. But it also built a stronger relationship with the carrier and the distribution partner because they were generating leads for them and helping both companies make more money.
Alan
Our CEO, Fred Studier, just recently published a white paper and he quotes research talking about the importance of tech enabling agents. How do you view your role, Andrew, versus your downlines in tech enabling the sales experience?
Andrew
Yeah, I think that this is very important to our entire industry. We touched on this a few times throughout the podcast already, but our role, as I see it, is providing data to the agencies. We are working to implement artificial intelligence to help us and in turn help our agents understand who is a great target, who is the most likely to be a good sales lead, and who is most likely to be a persistent sales lead. What are the common factors that lead to cancellations? It's very important and oftentimes there's a disconnect with the data. Our agents have data on the front end, so how did they get the lead? Who is this person?
How did they sell it? What did they buy? We have data on the back end. Did they file a claim? How many times did they call us? Did they have a cancellation? How soon was it?
And what are the common factors in all of those pieces of data? So what we're doing is compiling that data, implementing some artificial intelligence so that we can provide back to the agents and hopefully can make them even more efficient than they already are in this process.
Alan
So what could carriers do to make your business and your downline agents more effective?
Andrew
Well, this is a great question and something that I spend a lot of time thinking through and talking through with carriers. The filing process, if you've never been at a carrier, is very expensive. It's very time consuming. And many of the carriers have what you might consider stale products. They've been out, they've been filed ten years ago. And as you know, your life has changed greatly in ten years. Your needs and wants have changed dramatically in ten years.
So I think as an industry, we've got some staleness out there in the existing products. And because I worked at a carrier for so many years, I understand why it is difficult to go out and file new products or enhancements, because it's very time consuming and it's very expensive. But it is certainly something that is needed. This market needs to evolve. It needs to meet the customers demands and the customers wants and desires. As your and my needs and wants from insurance change over time. You also have this organic change in the market that you're serving.
We talked about my dad earlier. He has a much different need for insurance than my kids will have when they get out of college. So coming up with the right products is very important.
Alan
Do you have an idea or a notion, Andrew, on what those products would look like?
Andrew
Yeah, I think we touched on them generally before, but ease of the buying process, ease of access to care and providing a product that people fully understand and comprehend. Insurance. You and I have been in insurance for a long time. If we see a schedule of benefits, we understand what that product is doing. If we get an EOB - while they're still challenging for me to understand, I have a greater understanding of what that EOB means. But the general population that we're selling to doesn't have the luxury of 15, 20, 35 years in this business. So doing a better job of creating products that a consumer can easily and quickly understand and know how important it is to them is very important.
One other thing we talked about earlier-the subsidies in the exchange are ever changing. As those subsidies stick around, those products become very inexpensive to the consumer. But those products also have holes in them that need to be filled with what you and I would call ancillary products very important to the future of both the agencies that are selling in that market and ourselves. As TPAs and carriers.
Coming up with virtual primary care is a perfect example that's a product that really wasn't out there three or four years ago is becoming very popular. Having one provider that you talk to each time you get on a video call is something that the consumers want and need, and I certainly understand why they like that. It's much better having one doctor to talk to than it is a different one every time that you're having to go back and tell them things that you've already discussed with your primary care physician.
Alan
For us in the business, especially the under - well, for both the under 65 and over 65, open enrollment is a very busy time for us. And it not only creates a big, necessary need for the purchase of insurance, but the demand is way up, and you're quite busy. So what are you guys doing in preparation for open enrollment later this year?
Andrew
Great question. Our prep for open enrollment 2023 started during open enrollment 2022. As we are in an open enrollment cycle, we're constantly getting feedback from our agents. What's working, what's not, what do they need? And in the moment, nobody can make those tweaks and changes that quickly. So as we take in that information, we start a parking lot of ideas that we need to start working on for the next open enrollment season. So it really starts a year in advance, and we spend a considerable amount of time analyzing that feedback that we're getting, and we start working immediately with our carriers and our partners to be ready for the next year.
I think the thing that I took out of this prior open enrollment in 2022 is that the subsidies were such that the exchange products were very affordable. The most important thing that we got feedback on were many of the consumers that we're talking to did not have what I would call excess spendable income to spend on ancillary or add on products. I think it's clear to everybody there are gaps and holes in the exchange products that need to be filled. But if a consumer doesn't have $125 a month extra to spend on filling those holes, they're left with no options. So what we have done is work to provide the most efficient add on products at very affordable prices for the 2023 open enrollment.
Alan
I wonder if there's a way to have a conversation with Congress to say, hey, the subsidies are great, but they only provide the primary care. But there's other parts of that that really need to fill in the gap. And it would be nice if you could designate another subsidy to buy ancillary type products, which are certainly needed.
Andrew
That is a fantastic idea. I think we should talk more about that and come up with a plan on a golf trip soon, and you and I can go attack that.
Alan
Yeah, I like that. So you're preparing all year round for open enrollment, whether it's for 23 and late fall, early winter, you're probably preparing for the next year. But when do you like to just say, all right, I've got my product set in my suite of products, I've got it. And so now we're going to just basically go after the market.
Andrew
Yeah, I would say two months leading up to open enrollment is really cut off because you have to have time to train the agents and the agencies on your products. So we really have a cycle where two months prior to the start is where we're cutting off that work on new enhancements or changes to the portfolio. But because we've got thousands of agents out there in the call centers and we need time to ensure that they understand the product. And oftentimes when we go in to train them or update them on new products and services, they have questions. We have changes, whether it's technology or brochures wordings or just essentially the way the product are served up to the consumer. So that kind of 60 day window allows us to make tweaks and changes to what we thought was a perfect plan.
Alan
So we've talked about lifetime value of a product or the persistency of a product. Like we mentioned earlier, one of the secret sauces in the business is getting your cost per acquisition, your CPA, down into a manageable area, get your lead cost down to a manageable area. But I've always been a huge proponent that the longer you can keep that client on a policy, the better everybody is served. So with that, and again, we've touched on it a couple of times, but what are you guys doing specifically to try to increase the lifetime value and the persistency of some of your products?
Andrew
Yeah, this is really job one for us. This is the most important thing we do. The products, obviously are important. The price is important. But understanding what the customer needs leads to improved persistency. And this is where we spend the lion's share of our time and our thinking.
Are the products priced right? Are they easy to use? Does it fill? The need for the consumer is important, but these are all things that we have throughout the year, created and thought on during the moment after the sale. What we do is try to ensure that the consumer understands what they purchased and understands how to use it. Are we doing the best that we can from a customer service perspective, both right after they buy the policy and during their entire lifecycle of the policy? Many of the products that we sell, we actually are proactively reaching out to every consumer that buys from us. We reach out via email, text, and phone call to make sure that they understand what they've bought and how it's used.
Oftentimes when we get cancellations, it's because the consumer wasn't using the product.
Alan
Right.
Andrew
And as you know, oftentimes you'll have these subscriptions and periodically you'll look at your credit card bill and you say, pay $29 for Hulu, and I haven't used Hulu in three months. I'm going to cancel that. Right. Well, what we've done is it's the same way in insurance. If somebody isn't using this insurance, then we want to understand why. And oftentimes it's because they didn't understand it or they didn't know how to go find a doctor. And so we're proactively making phone calls to ensure that they understand what they have and how to use it.
I think historically, there are many TPAs or carriers out there that think no news is good news. And if you're sitting back and waiting on claims to happen, I think that's when your persistency goes down and we've taken the exact opposite approach where it's not encouraging people to go file claims, it's encouraging people to understand what they have and how to use it when they need it.
Alan
Yeah, I couldn't again, I couldn't agree more. When you say you guys reach out to the client, is that OptiMed or is that your downlines or both?
Andrew
Yeah, it depends on the relationship that we have. Many of our interactions are direct to the consumer after the sale. So many of our partners think that we do a great job in that area and allow us to have the flexibility to go in and have conversations with people that they have sold to. There are other partners that are very good at doing that. They've got a very robust program and we're very okay with them doing that. As long as we believe that the consumers are being treated fairly and they're doing the job that we want them to do with the consumers, then we're very flexible to allow that to happen.
Alan
Having owned a TPA and an IMO in previous lives, we always were very adamant about the same thing, and we called it - certainly the first touch was a “concierge call” where we would reach out to the member and say, “do you have any questions? Can I explain the benefits to you again?” And we found that immensely helped because then they said, oh, okay, thank you very much, and then gave them, obviously, our number and said, feel free to call us anytime, but we try to reach out to that person. At least on the first month or so, at least twice, and make sure that they understand what they bought and they can use what they bought. So I think that's very important.
So we've talked a lot about the past and the present and a little bit about the future. But where do you think, Andrew, this space is going to be in the U65 that you serve? Where do you think it's going to be, say, in three years and five years? And I know a lot of it depends upon the legislation.
The one thing that I've always learned about companies like you guys that are very flexible and nimble is that you can change with the times. So if Congress says, now we're changing the rules, you guys go and talk to the carriers and say, hey, now we need to create these types of products. And yes, I know it can take well into two years to file and get a product approved in the majority of a number of states that you want to do business in. But in your vision, what do you see in three years and five years?
Andrew
Short answer is growth, growth and more growth in this space. We're very bullish on this space. Otherwise we wouldn't have gotten into it 18 months ago. You touched on regulatory headwinds and tailwinds, and that's something that’s kind of in the periphery that is always going to happen. I believe that that will exist forever. It has always existed.
There are changes at a state level, at the federal level, and that's just something that you have to anticipate and understand that it's going to happen. I think one of the things that I live through in the insurance space, that from a carrier perspective, was healthcare reform. And what I witnessed was a number of brokers and agents spent two years complaining about the changes, and they became dinosaurs in the market. You had another sector of the brokers and agents that said, you know what? I know this change is coming. I want to get out in front of it and I want to be there when it is implemented. And those are the agents and brokers that really thrived and grew immensely during healthcare reform implementation.
So. We do want to always keep an eye on that. Complaining and moaning about changes happening are not something that we're going to do. We're going to be ready. We're going to make tweaks and changes and steer the ship in a different direction to ensure that the consumers have the products that they need, no matter what the regulatory headwinds or tailwinds are doing. I think three to five years, I think you'll see a lot of consolidation in the TPA market.
You've already seen that. But there aren't a lot of TPAs out there that are doing this. As you know, the margins are relatively slim. So this is about growing the number of consumers that you have and improving the persistency. Two ways to do that. One is organically, just outperforming all of your competitors. The other way to do that is by acquiring and merging TPAs that are in this space. So I think you'll see a lot of that over the next five years. I think the TPA landscape in the individual space will look much different in five years than it does today.
Alan
Yeah, I agree. And I think technology will continue to play a bigger and bigger role in your business. In our business. I think that you mentioned earlier, the people that are buying now, they want to get things on their phone. They want to be able to access things immediately. Quite frankly, they're more sophisticated now.
And so I think technology is going to continue to improve and enhance the experience for the consumer, for our clients.
Andrew
I agree. We are certainly in a consumer driven society, so that will happen organically. And the carriers, the TPAs, the agents, the brokers, the technology providers that are ahead of that are going to be standing on top at the end of the day.
Alan
Yeah. So, Andrew, thank you so much for spending a few minutes with us today. I sincerely hope you and OptiMed have a great remainder of the year. Thank you.
Andrew
I appreciate it. Alan, good to talk to you.
Narrator
Thanks for listening to this week's episode of Insurance Innovation, brought to you by e123. We hope you enjoyed the show. Please provide feedback and let us know topics that would inspire you on the website at e123Insurtech.com, home of the premier life and health insurance distribution management system. If you'd like to be featured as a guest or tell us about someone you'd like to hear us interview, please reach out. We'll see you next time.
