Larry McClendon Shares His Solution To An Overpriced Individual Market
Larry McClendon, CEO of National Insurance Agency and Roth Robertson, COO, recently shared their thoughts on the new HSA-compatible plan rolled out by American National — Catastrophic Complete —and what it signals for the insurance industry as a whole.
Norvax: Tell me a little about National Insurance Agency, and what you do.
Larry McClendon: At National Insurance Agency our primary concern is providing a top rated carrier that is going to be around in the future, because we’ve all seen them come and go. If you can’t get the policies issued, if you can’t get them paid, can’t educate, can’t get renewals, can’t receive their commission, then what’s the point? We advance commission every single day. If an agent submits an application we pay them the following day. We’re very unique in this market. And then we provide them with 5 leads for every application.
Norvax: Let’s talk a little about one of your core carriers, American National.
LM: American National has been around since 1905 and is just one of the most well respected companies out there in the marketplace. Which I have a lot of respect for because they don’t move with the trends, they don’t lower their rates because they’re trying to buy business and then up them when the rate guarantee wears off. They’re there for the long haul. And I think that’s so important for an agent to realize: this is a strong carrier that’s out there, been in the marketplace; they’re like a sleeping giant that is just there with some great policies, great plans and great protection for a consumer. They’re not going anywhere; they’re not going out of business; their capital reserves are fantastic. I formerly worked for them, back in the early 90s, as an underwriter. So I know everyone from the inside out.
Norvax: Can you describe their new plan, Catastrophic Complete? What is it, and what are the benefits?
LM: Catastrophic Complete is a new product that American National has put out and the niche and need for this product is right now. I think it is the most needed product on the free marketplace, due to you can actually get the deductibles down lower again while the trend has been to raise deductibles to get the premiums down. The rates on this product are simply phenomenal.
Roth Robertson: They’re very competitive with anything out on the market. And the good thing about it is you can have it non-HSA or qualified HSA — indemnity or PPO.
Norvax: Besides the deductible and the pricing, what are the other benefits of Catastrophic Complete to the consumer?
RR: With a lot of carriers you have to put a certain amount in to start collecting interest. With this one it’s first dollar interest and there’s no account set-up fee whatsoever, and the administers’ fee per month is very very low. I don’t know any other carriers that do that.
Norvax: What impact will this new plan have on your business?
LM: It’s going to have a great impact on business. The price of the product is so affordable with a lower deductible. In today’s marketplace most employers are pulling out and not providing group insurance for their employees. I’ve talked to waitresses and waiters, barbers and beauticians, everyone, none of them have any health insurance. They can’t afford it. This product brings it back into line where they can have a product that can give them some excellent coverage at an affordable price. And 73% of Americans spend less than $500 a year on healthcare expenses. And then 95% spend less than $5,000, or less each year. With that being said, what are your chances? Should you raise the deductible? It gives you a great choice to know you can have a catastrophic program that’s there, that you can make a choice on your deductible and on your premiums with a huge carrier like American National backing it up.
Norvax: How do new programs or plan introductions impact agents in general? Does it take awhile for agents to get up to speed?
LM: This product, the commissions are a little higher because it’s a catastrophic program, generally 5% higher than the average health plans that are out there overall. The advances are a 10 month advance commission and those are paid daily. With the Norvax program, they’re able to quote this product very very easily. You click on Norvax, you pull it up and all you see is American National because of the price. Norvax pulls up and basically sorts them by price by the cheapest going down, for pages and pages you see American National because of the price. And the Catastrophic Complete is going to be a major player in today’s market.
Norvax: Is Catastrophic Complete a difficult plan to rate?
LM: The difficulty with rating it was some carriers want to be very conservative on how they let agents get to the rate software. And some are so conservative that it makes it prohibitive for agents to quote it. You’re jumping through hoops just to quote their program. With Norvax, you go on there quote it, it’s done. Agents in today’s market are not going to jump through hoops when time is money. And they’re going to go in there and try to learn a new password and download it from the carrier? Just go to Norvax. Quote it. You’re done.
Norvax: Can you forecast the revenue potential Catastrophic Complete will have for you?
LM: I’m forecasting in the neighborhood of probably about $10 million in annualized premium for 2007.
Norvax: Do you foresee any big trends in health insurance? Is Catastrophic Complete a sign of things to come?
LM: I think you see two trends. I see trends with carriers who are going after the agents’ business. Because they think, “What can we do for an agent to make them do business with us? How can we make it easier to do business with us?” Norvax makes that a little bit easier on their own. And I see Catastrophic Complete has a niche. You have people who say, “I just need some Catastrophic Coverage up to 7 million dollars to help me with some low premiums.” Then you have the customer who’s more worried about the low dollar stuff like the $25 office co-pay and the drugs. There are two different mindsets, and we want to be able to field both of those mindsets.