Here is what you’ll find in this week’s newsletter!

1. Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.

2. Deep Dive 📚 - This week’s deep dive is the 10 Steps to Create a New Medicare Insurance product!

3. Sponsor Snapshot 🚀 - The FCC’s $299,997,000 fine.

4. Data Visual of the week 📊 - Data Visual highlighting the size of the Ancillary Health Insurance Market.

It’s only a 5 minute read, but it will make you 10x smarter.

Deep Dive 📚

10 Steps to Create a New Medicare Product.

Our deep dives typically provide information and data related to the Medicare market.

Information that helps you wrap your arms around the Medicare market, see trends, headwinds, and opportunities.

It’s the same information the team at Telos Actuarial uses to help train employees and educate clients when developing new products for the Medicare space.

Today is a little different. Today is a behind-the-scenes look at the PROCESS taken when helping clients launch a new insurance product.

A guide for how to go from:

• having no product 😥

to

• having a product that consumers love 😁

Our team has helped create and launch 20+ new insurance products over the last several years.

This process is generally the same regardless of which product line you are developing. Medicare Supplement, Medicare Advantage, Dental, Hospital Indemnity, Critical Illness, Short-Term Care, and Accident are all examples of products sold to seniors who are Medicare age.

With that, here are the 10 steps to creating a new insurance product for the Medicare market.

One note: The steps don’t happen in perfect order. Numerous steps often happen at the same time in coordination with one another.

1. Market Research

• Identify your target audience within the Medicare market.

• Analyze demographic trends, needs, and preferences.

• Study potential demand for your product and any gaps in the market.

• Consider regulatory and compliance requirements at a federal and state level.

Telos Actuarial publishes market research in the form of Guides and Reports. For Example, this comes from the free “Future of Medicare Supplement” report:

2. Pick Key Partners to Work With

• Identify and evaluate potential partners:

  • Distributors - Sell the products

  • Third-Party Administrators (TPAs) - handle customer service, pay claims, etc.

  • Reinsurers - take on underwriting risk

  • Actuarial management - you should work with Telos Actuarial for this 😎

  • Technology - quoting and enrollment platforms, underwriting data, etc.

  • Leads - this week’s sponsor HealthQuotes is an example.

3. Develop Key Assumptions for Pricing

• Outline the assumptions that will drive your product's design and pricing.

• For example:

  • Expected Benefit Cost (utilization X cost)

  • Commission Expense

  • Acquisition Cost (marketing, underwriting, sending welcome packages, etc.)?

  • Administrative Cost

  • Risk Capital Requirements

  • Profit Margin / ROI Requirements

Setting assumptions is accomplished by coordinating between numerous parties. Distribution, TPAs, Finance, Underwriting, etc. all provide information on the expected costs. It typically falls on the pricing actuaries to determine how to turn these expenses into assumptions used in a pricing exercise.

Here is an example of Commission expenses that would be included as an assumptions when pricing a Medicare Advantage product (comes from a post by Agility Insurance Services):

4. Price

• Determine the pricing strategy for your product.

  • does the product have unique benefits where premium rate matters less?

  • Or are the benefits standardized and the premium rate is the main focus?

• Factor in expenses, profit margins, and competitor pricing.

• Develop a pro-forma showing how premiums, expenses, and profits emerge over time.

• Ultimately, set premium rates that cover expenses, produce profits and make sense competitively

5. Competitive Benchmarking

• Research and analyze existing products in the market.

• Benchmark your product against competitors

• Items to benchmark include:

  • premium rates

  • commission rates

  • benefits being offered

  • underwriting questions

• Use benchmarking insights to differentiate your product and address gaps.

Here is an example of a premium rate benchmarking that Telos uses when pricing a Medicare Supplement product:

6. Develop Policy Forms, Applications, Outlines of Coverage

• Create policy documents, application forms, and coverage outlines.

• Ensure clarity, accuracy, and compliance with industry regulations.

• Provide transparent information about benefits, coverage limits, and exclusions.

• Note: This step often happens in coordination with the pricing step.

7. Iterate

• Review and refine your product concept, pricing, and documentation.

• Seek feedback from internal teams and partners.

  • Can the Distribution sell it?

  • Can the TPA administer it?

  • Will it gain approval from regulatory bodies?

  • Does it meet internal profit targets?

• Iterate based on feedback to enhance product features and user experience.

8. Gain Approval

• Submit your Medicare product proposal to regulatory bodies for approval.

• Comply with legal and compliance requirements specific to insurance products.

• Be prepared to address any concerns or questions from regulators.

Medicare Supplement, Dental, HIP, Critical Illness and other A&H products are primarily filed through a system called SERFF:

9. Build Buzz

• Develop a marketing and communication plan to generate interest.

• Utilize various channels such as social media, industry events, and press releases.

• Highlight unique features, benefits, and advantages of your product.

• This is often done by FMOs (Distribution Support Organizations) that have top level contracts. They create buzz with the agencies and agents to get the product to their portfolios.

As one of many examples, Humana has recently used Linkedin to create buzz around their new Medicare Supplement products (link):

10. Launch

• Once the product is approved and there is buzz, launch!

• Congratulations, you now have a Medicare product out there in the market.

• Watch sales numbers increase 🚀

Afterward:

This part isn’t as fun, but is very important.

Continuously track product performance, customer feedback, and market response.

Monitor new business coming in the door to make sure it’s lining up with pricing expectations.

Monitor loss ratio expectations, expense and profitability expectations, customer retention expectations.

Finally, for many of the products focused on the Medicare space it is important to re-evaluate and reprice products annually. This happens through rate increases, bidding, or filing enhancements or new products.

Data Visual of the Week 📊

This week’s Data Visual of the week comes from a recent blog by Telos highlighting the size of the Ancillary Individual Health Insurance Market.

If you’re ready, here are some ways we can help you:

• Newsletter Sponsorship opportunities: promote your product or services to leaders in the Medicare space. Let’s discuss. (link) Note: 6 slots already taken.

• Market Research: Reports that help you wrap your arms around the Senior focused insurance markets. (link)

• Consulting: We can help you develop new insurance products for the Medicare market. Let’s discuss. (link)