Insurance Product Development Archives - Page 5 of 5

7 Pitfalls to Avoid in Providing Accident & Health Product Rate Filing Support

Going through the process of a nationwide rate filing, or even filing in just a handful of states, can be a complex and lengthy process. Addressing the specific requirements of all 50 states plus DC, and provinces can get overwhelming, especially with new product filings. Each state has different filings requirements, and sometimes the differences between states are dramatic. No matter what, your end goal is profoundly important: to avoid objections, disapprovals, or the need to withdraw your filing. Ensuring that things are done properly from the get-go will make the process more streamlined in the long run.
In our decades of providing insurance state filings service for companies in all jurisdictions that write all lines of business, we’ve seen many of the common mistakes that result in lost time and wasted resources. These pitfalls can be avoided–if you know what to look for and how to take action.

Pitfall: Not knowing all state regulations and statutes

This is the single most common trap we see in state filings. Understanding the specific requirements for each state is a complicated and cumbersome process. But there’s more to it. In order to make sure your filings proceed smoothly, you also need to be aware of what we call “drawer regulations”–the unwritten rules reviewers may follow but aren’t written into the state statute. Knowing the written as well as unwritten requirements can reduce the chance of your filing being kicked back. Working with a knowledgeable actuary or state filings unit can help significantly when it comes to knowing these regulations.

Pitfall: Not knowing each state’s minimum permissible loss ratio requirements

Each state has different minimum permissible loss ratio requirements, which in turn affect rates. First and foremost, these loss ratios vary by group versus individual coverage. Individual minimum permissible loss ratio requirements are often based on NAIC individual loss ratio guidelines, however, not all states follow this guideline. Furthermore, some states extend the NAIC guideline to group coverage, while other states have their own requirements. Loss ratios can also vary by type of coverage and renewability clause, as well as invoking low or high average premium adjustments. Your rates will be different in those states based on those specific regulations. Be sure to equip yourself with these important pieces of information prior to filing to make sure you provide for the correct loss ratio for the type of policy you’re writing in a particular state.

Pitfall: Not knowing which supporting documents should accompany your filing

As we have stated before, it’s smart to file exactly the supporting documents that your state requires–and nothing more. Some states require that you submit transmittals, checklists, rating examples, underwriting guidelines and/or experience rating guidelines. Some states also have specific requirements for components that need to be included in the Actuarial Memorandum. It is also recommended to restrict the information you provide to only what is necessary to reduce the number of objections and questions; otherwise, you risk opening Pandora’s box.

Pitfall: Not taking into account time it takes to address objections

While all state filings may receive objections, limiting your number of objections not only preserves your company’s reputation with the reviewer, it reduces the amount of time required to respond, thus keeping you on schedule. In certain states like Florida, the department of insurance tries to turn around a review in 30 to 45 days. If that time period is close to expiring and you can’t respond quickly enough to the objections you receive, you risk disapproval or needing to withdraw your filing altogether.

Pitfall: Prioritizing speed-to-market over due process

Most of our clients want to offer products with the goal of launching them in as many states as possible, as quickly as possible. Due to our experience as an insurance state filing service partner, we know which states are file and use versus prior approval. Certain states allow you to begin marketing your product the moment you hit “submit” on your filing. Others require that you receive full approval before you can market your plan. Knowing the correct state standards can save you from serious infractions.

Pitfall: Lacking an end-goal for the product

It’s always a good idea to make all stakeholders sign off on your entire product, from forms to rates, in the planning phase before you get to your actual state filings. If you want a particular product to have variability, your rates need to coincide to reflect those variations. If you don’t outline these details going into the initial filing, inserting those components after the filing process has begun may require re-filing. This can be costly, time-consuming and frustrating for your entire team.

Pitfall: Inconsistency between rate manuals and forms

Inconsistency is a surefire way to elicit questions and objections from the reviewer. When we provide insurance state filings service to our clients, we always work closely with the product design unit and forms department to make sure that rate manuals are consistent with forms. This is especially important when a product’s allowed benefits vary from state to state and impact rates. Double check all relevant documents to make sure everything matches.
State filings are a complicated process that requires close attention to detail. A seemingly minor oversight can have a huge impact down the line. It’s always a good idea to partner with state filings experts who can help you manage your filings and make sure all your ducks are in a row before you begin.

If you have questions about how your filings process can be improved, contact Perr&Knight and we can discuss ways to streamline your operations.

Expert Tips to Avoid Accident & Health State Filings Form Rejections

by Susan Cornett

State filings form rejections waste your company’s time and money. When you are forced to resubmit your forms, your company is on the hook to resubmit state filing fees (where applicable) and SERFF fees. These fees might be nominal in some cases, but if you are required to resubmit multiple forms in multiple states, they can range from a few hundred to thousands of dollars. Depending on the state, when you resubmit, you also run the risk of re-starting the approval clock from zero. This can result in delays of weeks or months, and lost revenue due to delayed insurance product releases.
During our decades providing state filings services, we’ve seen almost every reason a form is likely to be rejected. We also know that many of these setbacks are avoidable. Here are some of the most common mistakes that lead to rejection–and what you can do to prevent them.

Tip #1: Pick the appropriate type of insurance (TOI)

When you file through SERFF, you must specify the correct code for the exact type of policy you are submitting. In most cases, a sub-TOI is also required. These codes are crucial because they let the department know what to expect when reviewing your forms. The reviewer evaluates your form through the lens of your selected TOI, looking for particular information. A wrong TOI code subjects your form to review under the wrong classification and may result in unnecessary objections. It can also make your submission look sloppy. Submitting a filing under an incorrect TOI is one of the fastest ways to get your form rejected outright.
NAIC publishes updated codes every January. Each state’s DOI has the authority to control the number and types of insurance codes that they accept each year. Depending on the types of policies issued in their states, commissioners can “turn on and turn off” codes at their discretion. Insurance consulting companies that offer state filing services regularly review these changes, looking for new codes that apply to emerging products and codes that are no longer in use.
But what if your policy doesn’t exactly fit a particular TOI? No matter whether your product is an exact fit or not, you must pick a TOI code. For policies that don’t exactly match a particular state’s TOI code in SERFF, select the code that most closely aligns with your policy, then address individual points of variation in the filing description. Unfortunately, there are no guarantees that a reviewer will read your description, but it’s your best course of action. If you’re unsure about which TOI to select, work with an experienced insurance consulting company that specializes in state filing services. They’ll help you evaluate the code that most closely applies to your form.

Tip #2: For group policies, correctly identify your market

Selecting the correct group designation (“employer,” “union,” “association,” etc.) is hugely important. Your form is subject to rejection if the designation is incorrect or does not match what is allowed in a particular state. As with correct identification of TOI, the self-designation sets the lens through which the reviewer will check your forms. If you are missing required accompanying forms (i.e., association by-laws) for a particular type of group designation, your filing is likely to be rejected.

Tip #3: Pay close attention to the requirements of each state and line of business

Checklists, transmittals and certification requirements vary by state and by line of business. Health-specific plans that are subject to the Affordable Care Act (ACA) require additional considerations, including form and rate requirements and other ancillary forms. It’s easy to get lost in the weeds. You must have a clear understanding of the questionnaires and filing certifications required by each state. These requirements are usually–but not always–listed on SERFF. Pay attention to these details. Missing or incomplete information will stop your filing in its tracks.

Tip #4: Include required information–and nothing more

Pay close attention to the specific information that should accompany each filing. Include what is required by SERFF but do not include additional information. Doing so can open your filing up to questions and confusion.
The sheer volume of work required to track filing requirements that change frequently and vary by state can present challenges for internal departments at most insurance companies. We recommend working with an insurance services partner who provides detailed content reviews as part of their state filings services. Their breadth of experience and deep understanding of all specific statewide filings can save you time, money and runaround.
When it comes to avoiding state filings form rejection, the most important thing is to take your time. Hasty work leads to oversights and careless mistakes that can set your filing back to square one.
Have questions about your state filings process? Contact us today to speak to our state filings experts.

Gap Medical Products: What They Are–and Why They’re Increasingly Going to Be Needed

by Perr&Knight

As major medical insurance regulations remain in a state of seemingly constant flux and medical inflation continues to rise, Gap medical coverage is emerging as an important product for insurance consumers. Even with major medical coverage, steep out-of-pocket expenses can strain the finances of average households. By offering Gap medical products, insurance companies can provide a layer of protection against large expenses not covered under high deductibles and out-of-pocket medical plans.
Here’s what you need to know about these useful policies and why they are starting to play a crucial role for major medical consumers.

First off, what exactly is a Gap medical product?

In the marketplace, the phrase “gap plan” is used loosely for various products, many of which are not entirely accurate. Certain supplemental health plans may pay flat amounts for particular services, which can sometimes be referred to as “gap”, but these plans are more like hospital indemnity or limited medical-type products. They may be used to cover gap expenses but aren’t necessarily designed to explicitly cover those costs and therefore may fall short of the insured’s need.
True Gap medical coverage is a supplemental health insurance product that covers out of pocket expenses for an insured who is already covered by a major medical insurance program. It’s designed to “fill in the gap” between coverage from a major medical policy and the final cost to the insured. The product is designed to reimburse the insured person directly, covering expenses up to the plan’s annual out of pocket maximums. The product is analogous to Medicare Supplement Insurance, although Gap medical coverage is targeted to an active working population, not retirees.
The first generation of these products usually required that the insured pay the out-of-pocket costs upfront and then the insurance company would offer reimbursement. The second generation of these policies has started to see a change in payment structure that is now allowing for the insurance company to pay the healthcare provider directly. The insured incurs no out-of-pocket expense for a covered service.

What is needed to sell Gap medical products?

These insurance products are designed to be offered in conjunction with an employer-sponsored major medical plan. There is no need to develop or use existing provider networks, as any A&H insurance company can enter this market. Claims generally are adjudicated based on the insured’s Explanation of Benefits (EOB) of covered services and a claim form. However, as the sophistication of this product evolves (i.e. the second generation of Gap products), administration will become more complex.

What types of services do Gap medical products typically cover?

These policies usually cover the out-of-pocket costs for medical services that are commonly considered to be both infrequent and generally unavoidable. Most plans provide coverage for out-of-pocket costs related to (but not limited to):

Inpatient hospital admissions and stays
Outpatient hospital, surgery, and diagnostic services
Outpatient chemotherapy/radiation
Ambulance transportation
Durable Medical Equipment

These plans are not meant to cover every out-of-pocket expense. They generally do not reimburse for an insured’s cost sharing related to Physician’s office visits, Emergency Room/Urgent Care visits or Prescription drugs. By limiting the types of expenses these policies cover, insurance companies can ensure that the policies are utilized in the manner for which they were developed: to protect insureds from unexpected financial hardship while keeping premiums affordable for the policyholder.

What advantages do Gap medical policies provide?

Gap medical products provide protection at low cost to consumers and low risk for insurance companies. For customers, these plans work better than health spending accounts (HSAs) because they provide coverage for similar expenses without having to worry about fund management. For insurance companies, these insurance products result in low exposure to financial severity since they are limited to a policyholder’s annual out-of-pocket maximums.
Regardless of changes to the Affordable Care Act, Gap medical coverage is becoming increasingly necessary for policyholders. The ACA and its impending reform do not address medical cost. Therefore, as medical inflation goes unchecked and major medical plans become less affordable, more and more out-of-pocket costs will be pushed onto the consumer.
If you are thinking of developing a new Gap medical product for your insurance company, it’s smart to work with an insurance product development company that has experience providing advice for these particular products. Not only do jurisdiction requirements vary by state, but it’s also important to know how your product will dovetail with the ACA and any proposed legislation changes. Partner with experts who can help you successfully navigate these specifics.
To discuss Gap medical product pricing or insurance product development, contact Perr&Knight at (888) 201-5123 ext. 3 and we’ll be happy to answer any questions or discuss solutions that are best for your company.

Not Your Grandfather’s Policy: Reaching Millennials in Today’s Insurance Market

by Terri Hitchcock

As the younger generation leaves the nest, they’re looking for insurance coverage that matches needs that are in many ways unrecognizable from those of previous generations. Not only are there differences in coverage, but millennials have customer service expectations that are vastly different from their parents and grandparents. Smart insurance companies are keeping up with the times, developing insurance products and customer service processes that match the millennial lifestyle–and it all starts by understanding how millennials live their lives and what’s important to them.

Home is where the Xbox is

Gone are the days of household inventory lists that include china cabinets, grandfather clocks, and heirloom silverware. Today’s millennial customer needs insurance for electronics, electronics, and more electronics. Flat-screen TVs, tablets, smartphones, external hard drives, smartwatches and gaming consoles comprise a millennial’s most prized possessions. Smart insurance companies are developing products that provide replacement coverage for electronic devices based on the current cost of brand-new equipment.

Bling home the bacon

Millennials are earning higher salaries in their first few years on the job than their parents ever did. Many are using this hard-earned cash to buy luxuries like high-end watches, jewelry, artwork, and sporting equipment. These one-off valuable items require policy extensions that expand beyond a basic homeowner’s or renter’s policy. The standard policies that many companies currently have in place don’t address these needs. They’re still offering $50k in contents when what the millennial consumer really wants is $5k in contents and a jewelry or sporting goods floater. Insurance companies should mine data to discover which higher-value items millennials seek to insure and offer policies that explicitly provide this coverage.

Click here for coverage

The millennial attention span is notoriously short (some research pegs it as shorter than a goldfish). Insurance companies can’t afford to continue much longer with paper-heavy processes. Young people don’t want to sit in an insurance office and listen to a pitch. They want to compare coverage at any hour, fill out an online form, upload a few pics from their smartphone and click to initiate a policy right away. Wise insurance companies are dedicating resources to developing a seamless digital presence that enables millennial customers to conduct much of their business online.

Spread the love

If baby boomers were the “Me Generation”, millennials are the “We Generation.” Social responsibility is important to young people and they seek to do business with companies that make an effort to invest in good causes and help communities in need. They’re more influenced by an insurance company’s explicit social actions today than a stalwart legacy. In addition to openly investing in good causes, insurance companies can tap into millennial altruism by crafting policies that empower customers to designate a charity that will receive monies somehow derived from the customer’s purchase, such as shared profits or a designated donation.

Rewards, rewards, rewards

So many of today’s companies offer rewards and incentives for adopting their services–and millennials expect their insurance providers to do the same. They’re looking for policy providers who craft offers that acknowledge good behavior and reward loyalty. Developing insurance products with vanishing deductibles, with the ability to purchase coverage instantly for only a limited period of time or a particular event, or with unrelated co-insureds show millennial customers that their insurance company acknowledges both their responsible behavior and the change in lifestyles and demographics.

Life in the fast lane

Millennial customers expect their insurance companies to respond with lightning speed when they have a question, need assistance or want to process a claim. They don’t want the current cash value of their property; they expect their insurance policy to replace their stolen or damaged property with the latest and greatest technology. They expect a guaranteed replacement cost, even if it’s above and beyond the current worth of the loss. And they want it on their doorstep tomorrow. The more an insurance company can streamline these processes, the higher regard they’ll receive from millennial customers.
Relationships have always been at the heart of the insurance business. Insurance companies must take a close look at what drives millennial decision-making. Outside sources like technology companies are encroaching on the insurance industry, upping the competition through their understanding of the millennial mindset. These tech companies hold no attachments to the “business as usual” mentality that many insurance providers have adhered to for generations.
By responding to the real-world expectations of the millennial market, insurance companies can establish trust by providing products that match the millennial set of priorities. Companies who ignore these priorities risk being left behind.
Interested in developing new insurance products to reach Millennials in your market? Contact us today to speak to our insurance product experts.

Why Partner with an Insurance Product Design Specialist?

by Terri Hitchcock

In today’s insurance marketplace, coverage enhancements and creative new lines of insurance are essential to maintaining a competitive edge. When developing or updating insurance products, many carriers take action without considering important details. They do not develop their products with market evolution and regulatory hurdles specific to each state or line of insurance in mind.
Many insurance companies also try to go it alone, relying on their in-house departments to design insurance products that fit the bill. But this method is fraught with risk and can result in rejection by the State Departments of Insurance that require additional time and resources to correct.
As an insurance carrier, you understand what your clientele wants but are you prepared to design the most appropriate insurance product to achieve it? This is where insurance product design specialists come in.

Insurance product design specialists understand the nuances of specialized lines of business.

They have years of experience in unique lines such as gap products in the accident and health arena and uncommon coverages like emerging inland marine lines for technology products, insurance for pets, and animal mortality. Specialists can provide advice and guidance on any aspect required by a particular line. Most in-house teams are simply not set up to provide such extensive insight.

They bring a fresh perspective.

Insurance product consultants think outside the box and develop innovative solutions to get you from idea to an approved product that satisfies regulators in a timely period. Many product design consultants have decades of experience and can handle all aspects of your development, or fill in for a gap in your staff. You can utilize their services to whatever degree you are comfortable. They can handle your entire project or simply slot into your existing team and lend their expertise.

Product design specialists understand the market and work with you TO ensure that your product will match marketplace needs.

With today’s rapid technology advancements, what worked in the past might not be the best solution. For example, millennials are buying insurance today in a completely different way than their parents or grandparents. They want instant quotes and payment submissions with a single touch on their smartphone. A specialist can help ensure that your product–and how it is delivered–keeps pace with the times.

Insurance product design specialists understand how to approach regulators.

They understand the distinct operating nuances specific to state Departments of Insurance and the submission requirements for each department. Some have personal relationships with individuals at the departments and can obtain answers quickly. As independent contractors, insurance product specialists can also make anonymous inquiries about new products or product enhancements without spotlighting exactly who is asking. This can save a tremendous amount of time during filing, enabling you to meet all regulatory requirements ahead of time.

Some do’s and don’ts for working with an insurance product design specialist:

Do…take advantage of their expertise. Ask pointed questions. Consultants are there to help educate you.

Don’t…be afraid of confidentiality breaches. Non-disclosure agreements are standard and reputable product design specialists will have no problem signing.

Do…ask about marketplace trends. Insurance product design consultants watch the entire insurance marketplace and can offer insight into shifts in the industry that can impact your business. Many advise clients on worldwide issues, including European clients who want to do business in the United States and American businesses who want to expand their coverage overseas. This insight can be invaluable to your company.

Do…interview your prospective product design consultant thoughtfully. Time frame generalities and “Which states will be most difficult?” are softball questions. Ask specific questions about the challenges your product will face. Answering in-depth questions with detailed specifics is the sure sign of a true expert.

Do…hire a consultant to peer review your product proposal before you file. This is an excellent way to evaluate their quality of work and can save you a tremendous amount of resources by avoiding a rejection.

Don’t…be afraid to work with someone new. Insurance companies tend to get mired in “business as usual” thinking and can miss out on valuable opportunities in the meantime.

We always recommend that you bring your product design consultant onboard as close to your project’s inception as possible. While specialists can handle your project at any stage–before, during, or after filing–you get the true value of their expertise when you enable them to contribute to your product’s development early on.
If you would like to know more about how an insurance product design specialist can help your business, call us at (888)201-5123 Ext. 3 and we will gladly discuss your product needs.