The Medigap Underwriting Community – A Growth Story
In 2013 Gen Re and a couple of other Medigap insurance carriers formed the nucleus of what is now a thriving community - the Medigap Underwriting Study Group (MUSG). Consisting of 45 individuals from 30 different companies, most are direct-writing carriers ranging from small to large in size; other member types include reinsurance, third-party administration and underwriting services. All in all, we are a diverse group with a range of experiences and perspectives.
MUSG has been a growth story from the beginning – one that likely is a reflection of the industry’s growth as well. Considering that CSG Actuarial projects that annual new sales of Medigap will grow from about $4.2 billion this year to about $6.8 billion a decade from now, it is no wonder we are seeing an increase in carriers seeking to enter this market for the first time. In addition, given the industry’s evolution, MUSG has become a valuable resource for Medigap carriers new and old to learn from their peers and evaluate and refine their underwriting practices.
Does your company accept applications when the agent has not met with the customer in person to complete and sign the application? What are the top three reasons your company will decline a Med Supp application? Do you consider a corneal transplant to be an organ transplant? What type of documentation do you require, if anything, for guarantee issue applications? Does your company use any special practices for claims submitted while the policy is in the grace period for late premium payment? These are examples of the many questions asked and answered by MUSG members in the surveys we conduct several times each year. For each project, Gen Re analyzes and reports the trends and issues that are most concerning and timely.
Recently, we asked members about premium rate reductions offered to applicants who are not users of tobacco - whether their application also asks about other forms of nicotine delivery, and the “look-back” period (1, 2 or 5 years) for this question. Based on their responses, we’ve been able to show that carriers take different approaches to these elements, including how much the premium can be discounted. In such a competitive market for a standardized product, premium cost is a major factor for consumers and agents, so knowing where they stand helps carriers decide to stay the course or take new approaches.
A couple of years ago, assisted by MUSG, Gen Re conducted the first-ever Medigap Underwriting Consistency Survey. The results were quite interesting. Overall, this survey provided excellent opportunities for industry benchmarking and for uncovering training needs within underwriting teams. One company, for example, shared that “Additional training was provided for staff to enhance consistency in responses. The Medical Director reviewed the criteria where noted inconsistency was found and clearer instructions were provided.”
We are always looking to add new carriers to MUSG. More data is better data, and better data helps us gain additional insights.