The Wall Street Journal recently called the individual health insurance market a “prime business opportunity” for insurers. How right they are. This market is expected to generate more than $100 billion in annual premiums in the under-65 market and an additional $200 billion in senior markets. Estimates coincide with what many health care experts are saying: The individual health insurance segment is rapidly becoming the biggest and most promising growth sector for health insurers and agents.
How do agents fit in? Well, it’s fairly obvious — they are uniquely positioned to help carriers sell these new products by providing the education and high-touch support that these emerging consumers need when comparing and purchasing coverage options.
If you haven’t yet devised a strategy to help you get your share of the estimated 25 million new individual, family, and senior paid policies that will be written in the next four to five years, the time to do so is now.
Following are three tips that will help you gear up for this rapidly emerging market.
#1: Keep up with the times
The individual market has been largely ignored for decades by the nation’s leading health insurers. So why the sudden interest? There are two key economic forces driving the rush to capture this market. First, commercial health insurance sales have basically flatlined since the early 2000s. Skyrocketing premiums have forced employers in the small and mid-sized markets to eliminate group health coverage, shifting the purchasing decisions and costs to individuals. If employers continue to opt out of group health plans, the number of individuals expected to need new coverage will increase substantially. According to the Economic Policy Institute, between 2000 and 2006 alone, an estimated 8.6 million Americans became uninsured, due primarily to the erosion of employer-provided health insurance. A lingering recession can only increase this movement in the near term.
Second, there is increasing pressure on policymakers to cover the 47 million uninsured Americans. According to a 2003 report by the Institute of Medicine, the U.S. spends about $35 billion per year to provide medical care to the uninsured.
These medical costs create a huge ripple effect throughout the economy.
Policymakers are demanding new programs to cover the uninsured and are calling on private health insurers to provide the plans that will meet these consumer needs.
In light of all this, be sure to keep abreast of state and carrier developments, because today’s market can move very fast, enabling legislation and new carrier initiatives. In fact, one recent carrier initiative targeting the uninsured in a small state generated 20,000 new sales in the span of eight weeks.
#2: Get to know your customer
Historically, the insurance industry has defined the “uninsured” as a “high risk” market segment, largely composed of individuals with pre-existing medical conditions and those who were unemployed. Today, that definition couldn’t be farther from the truth. As it turns out, 85 percent of uninsured Americans today are employed, almost half are between the ages of 18 and 34, and about 75 percent describe their health as “excellent” or “very good,” according to a recent Census Bureau survey. Most have some college education, and about half earn incomes that put them right in the middle of the middle class. This makes them prime candidates for individual health coverage.
#3: Understand your role
Agents are uniquely positioned to play a growing role in the sales of individual health plans, educating and guiding consumers to the coverage that best suits their family, health status, and financial situation. But these sales will be unlike anything you’ve sold in the group market. These prospects spend hours plugged into the Internet for entertainment, socializing, learning, and shopping. Already, according to Celent, about 50 percent of individual health insurance purchases are initiated or completed online, and that number is expected to increase to over 90 percent by 2012.
So where does that leave agents? Fortunately, agents are positioned to be the most important facilitator of coverage. Why is that? Because even with all the information and access that the Internet offers, the vast majority of shoppers require assistance from a professional advisor to understand and sift through the growing list of products, as well as numerous network, pricing, and financing configurations.
So regardless of where you’ve been and what you’ve sold in the past, when you make the effort to keep up with health industry developments and initiatives, learn all you can about your target market, and develop a solid understanding of your role in the industry, you can position yourself for success in the burgeoning individual health insurance industry.