The group market for long-term care (LTC) has tended to target programs to larger work forces due to the cost and time involved in creating new plans. "There's a lot of communication involved in setting up a plan, and first-year participation averages less than 10 percent because it's a voluntary product," says Christopher Matz, national sales director of group long-term care insurance at Prudential Insurance.
Employers offering LTC coverage also tend to want a white-labeled program they can customize with their own corporate identity. Completing the sales, underwriting, and customization processes of traditional group LTC typically takes Prudential about four months.
"From a carrier's perspective, you have to pick a threshold with traditional group where it will pay to invest your resources–which tends to be more than 500 employees," Matz says. "There has been a need for small employers to offer LTC, but it's been hard to meet premium requirements, and writing traditional group LTC below those requirements doesn't allow us to spread the risk."
Prudential saw the opportunity to offer a program for smaller groups that incorporated individual-applicant underwriting to manage underwriting risk while, at the same time, providing a turnkey approach for both employers and applicants in order to reduce the time and cost of the underwriting cycle. It's a simple-sounding approach but one other carriers had not yet put together, Prudential claims.
In July, Prudential launched LTC 1-2-3, which the insurer is marketing as "enrollment in a box," designed for businesses with 250 to 500 employees. To simplify administration and develop long-term actuarial credibility, Prudential created a master group in which to place all employers that provide employees the LTC 1-2-3 product. To speed deployment, Prudential developed standardized plan documents–a workable option, since custom-labeling of materials is not as important to smaller firms.
"The plan design and benefits all are commonly requested options; it's just already set up, and it's written through a trust rather than for each individual employer. [Program material] literally comes ready-made in a suitcase," Matz says.
Prudential leveraged its existing technology platforms for traditional LTC to deploy and support the new LTC 1-2-3 program. For all its Web content for traditional LTC, Prudential had architected an enterprise content management system that enables business users to custom develop portals that reflect clients' plan designs, contract documents, enrollment forms, and rate tables. The system also supports workflow for internal content approval processes and gives users live publishing authority.
Distributing this capability to business users enables Prudential to deploy customized enrollment sites and meet market demands more quickly than if this function were centralized. Even so, to simplify further the front-end development process for the LTC 1-2-3 system, Prudential created one new common application site with individual employer subpages.
Having a common application site and standardized materials enables Prudential to bring new employers online faster. "Employers can decide as close to two weeks prior to open enrollment they want to offer LTC coverage," Matz says. "We believe the product fits the niche for smaller employers who often make benefit decisions in the last minute to meet various financial cycles." Because the plan is administered like a traditional group policy, on the back end Prudential made only minor changes to its marketing and administration system from Atiam Technologies.
One key difference in the enrollment process between traditional group and the LTC 1-2-3 product is the latter includes an individual medical underwriting component. In order to simplify privacy issues, Prudential chose to have applicants complete a supplemental five-question medical questionnaire via mail rather than online. The questionnaire is generated automatically by Prudential's document and workflow system after the online enrollment portion is completed. Therefore, unlike traditional group, enrollment in LTC 1-2-3 is not guaranteed, and enrollment, from the applicant's perspective, is not a one-step process.
Nevertheless, just a few months into the program, Matz is pleased with the results. "On the day we released news of the product, I had a half-dozen quote requests. We've received ongoing requests not just from small firms but also from larger employers who are short on time and don't need a white-labeled LTC product," he says. "Interest has continued to grow, and we believe there is a real opportunity in the small group market."
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