Andrew Davison, Chief Underwriting and Operating Officer of MGIS, discusses 7 trends that may appear in the disability insurance market in 2023.
James Crook (00:06):
You are listening to the Broker Advisor Podcast, where we explore the disability insurance market, specifically as it pertains to protecting highly compensated healthcare professionals. The goal of this podcast is to arm you with interesting tidbits and anecdotes you can share with your clients and prospects. We have found that the two best ways to do that are to speak to healthcare professionals who have suffered from a disability or pick the brain of industry experts who excel in their field. My name is James Crook. I am a marketer and have a disability income fellow designation. I am your host. If you like what you hear, please remember to rate and subscribe. Thank you.
All right. Welcome back to the grand relaunch of the Broker Advisor Podcast. Today we’re going to be discussing some disability insurance trends we think a producer should be watching out for in 2023. Today I have the esteemed chief operating and underwriting officer for MGIS with us, Andrew Davison. He has prepared for this conversation and is going to be throwing his expertise all over the place. Andrew, welcome.
Andrew Davison (01:24):
It’s a real honor and privilege to be here.
James Crook (01:28):
Andrew Davison (01:29):
We didn’t discuss how I’m going to be compensated for my time here though. I assume there’s going to be some extra compensation related to this.
James Crook (01:40):
Andrew Davison (01:44):
If we’re talking to producers, that’s the language they’re going to appreciate too.
James Crook (01:49):
True. We’ll talk about the compensation after. The check is in the mail. It’s in the mail.
Andrew Davison (01:55):
No, thanks. It’s a great opportunity to discuss some of these things that are going on and how we think that MGIS can be a part of some of the solutions.
James Crook (02:06):
Absolutely. So if you’ve read the article that we’re basing this conversation off of, we’ve got five trends here, but Andrew, of course, as an expert, you probably have one or two that we haven’t mentioned here that we should probably talk about first. So if you have any, let’s discuss them.
Andrew Davison (02:28):
Yeah, sure. I think if you listen to the national news at all and just general trends, and some of these are related, for instance, rising healthcare costs, some of that is because healthcare professional compensation continues to go up because there is, and the trend that I was thinking about, is just a general shortage of physicians in the American healthcare systems. We know that we have an aging workforce. We have a lot of physicians that are getting older and older. We haven’t necessarily had the same number of new medical students coming into medical schools for a variety of reasons. And we’re just seeing the average age of the physician, we know this from our own block and watching how our block ages, and the rate implications from that, thinking as an underwriter that the average age of our covered physicians is going up, so it’s just logical that there’s a shortage happening.
And any of us that when we need to get direct face-to-face contact with our own primary care physicians, that’s maybe becoming more of a challenge to do, harder to get appointments, and you’ve got something going on you, want to see a doctor within a day or two, it’s getting hard to do that. So one of the major trends affecting our healthcare system, and therefore the disability insurance products that are designed for physicians is the physician shortage. And I know, James, you have, working with Kurt Meyer, our chief sales officer, come up with some really good information about how our group, LTD product, really can help be part of a recruiting and retention strategy for physicians. So that’s something we’re watching closely. We feel like we have some products that help address some of that, but that’s one of the major trends that I think is impacting us and anyone who’s in the physician space, healthcare professional space for insurance products.
James Crook (04:43):
It’s interesting how you say that, because as the compensation for physicians goes up, because there’s a shortage of physicians, supply and demand, the health insurance cost goes up because the physicians are making more. It puts an interesting pressure on ancillary benefits like disability because there’s less money to spend on the benefits. It’s interesting. How do you think producers can tackle that interesting problem?
Andrew Davison (05:18):
Well, there’s no easy solution to that, of course. Obviously, our product, we have a variety of approaches to funding the product, meaning it’s not always the practice or the employer that pays. It can be a voluntary product, it can be a partially employer paid, partially voluntary product, and there’s also the options to do a base level benefit with a buy up option that would be paid by the individual insured. So there’s some flexibility in the way that the premium is paid. And I think the thing to do that we have built a lot of expertise around is crafting plans that carve out those that have the highest compensation and having very targeted plan designs for those individuals. Whereas the balance of the employees within a practice, the staff, the clinical type employees, you can have tiered benefits down that are more appropriate for that level of compensation anyway, and that gets at some of the cost challenges as well.
James Crook (06:33):
For more information, talk to the MGIS sales team.
Andrew Davison (06:35):
The other thing I was going to say, James, is that there’s a lot of different ancillary benefits out there, and there’s new spins on those being added all the time, but I think one of the things we’ve learned is physicians, perhaps more so than any other profession in America, understand the need for disability insurance. So I would say if there’s a benefit that strategic practices don’t want to skimp on, it’s the disability insurance because they understand the need, they understand that a customized type of plan is really important for their financial wellbeing.
James Crook (07:19):
Makes sense. Great points. Thank you. Now, I think you had one more trend that you wanted to bring up.
Andrew Davison (07:26):
And it meshes really closely to what I just talked about where I mentioned, hey, I think we’ve all probably run into the challenge of getting an appointment with a physician, and getting it quickly.
James Crook (07:39):
For example, I know that you were trying to get that extensive plastic surgery on your face.
Andrew Davison (07:46):
And it certainly hasn’t helped, as you can see. So what we’re finding is a higher prevalence of what we call advanced practice clinicians, which are your nurse practitioners, your LPNs, your physician’s assistants as the primary contact with patients. So what we’re seeing is as a proportion of the employee population and practices, those advanced practice clinicians, the numbers tend to go up and they have some very specific income protection needs as well. So we’re watching that really closely and trying to find ways to craft our product and come up with plan provisions that are really going to hone in on that type of fashion. Those are pretty highly compensated occupations, and they’re not just a… I don’t know absolutely. They don’t have, obviously, the kind of educational requirements that physicians do, but you typically see them with advanced degrees, so the compensation is there and they’re going to need customized products, because they’re becoming more and more a major portion of the employee distribution within the healthcare world.
James Crook (09:07):
That’s really interesting. Are there any specific provisions you can speak to that would be important for an advanced practice clinician?
Andrew Davison (09:15):
Well, one of the cornerstones of our disability product is our definition of disability for healthcare professionals, which ties not to material and substantial duties, but rather actual procedures. What we’ve found is that a lot of advanced practice clinicians, also the CT [inaudible 00:09:40]
James Crook (09:39):
Andrew Davison (09:43):
CPT codes align with the services they provide as well, the procedures they provide, so one of the things that we’re looking at, we’re not there yet, but we think that having the option to provide a actual procedures based definition to advanced practice clinicians may be something that makes a lot of sense for us. Some of the other general provisions that we have where we don’t mandate rehab programs and things like that, we believe those are as applicable to advanced practice clinicians as they are to physicians and dentists because of that same what you have to do from an education and development standpoint to get to one of those physicians. These are driven people, and the patient contact and the patient relationship is really important to them. So we think those types of provisions, they’re not mandatory rehab type of provisions, are going to make sense for advanced practice clinicians as well.
James Crook (10:53):
Okay. Thank you. That’s a great example. All right. So we’ve covered your two extra-
Andrew Davison (11:02):
My two brilliant ideas, yes.
James Crook (11:03):
Yeah. I think they are pretty critical. In the article, we cover some that are a little bit more general than that, but let’s just walk through these, and I’d love to get your thoughts really quickly on each of these. So this increasing prevalence of chronic conditions, when we were writing the article, something that was interesting is just seeing the rise from 2001 to 2018, from 21% to 27% of US adults with multiple chronic health conditions, that was interesting, and then with COVID, it seems to have exacerbated that, especially because people couldn’t get in to see their doctors. And I’d just love to get your thoughts on that, on the disability insurance landscape, and what you see as an underwriter.
Andrew Davison (11:53):
I think with this, this is one of these interesting trends that applies very broadly that I believe, and I believe we’ve seen this play out in how our disability block performs, they’re just not as prevalent in terms of driving some really negative experience. And I think the very simple reason is you’re dealing with healthcare professionals, you’re dealing with physicians, people that understand that the problems of not taking care of themselves, the problems of… Because one of the main things that jumps out here you talk about is diabetes. You would think, again, it seems like it’s played out in the way our block performs, that more knowledge about diet, exercise, that kind of balance that physicians and healthcare professionals would have, would lead to better lifestyles, and it seems like it’s played out that way. Now, a flip to that might be the mental and nervous prevalence that you mentioned there and… What we were talking about here? The aging workforce more likely to experience mental health issues.
One of the things that you hear about is that a… I know it was mentioned here somewhere, but physician burnout. That’s something that obviously we pay very close attention to and have been watching to try to determine whether this is going to be a big impact on our disability block, it has not played out that way, because while it’s a real thing that stress and the burnout are obviously very real statistics supported, it’s really more in the frontline type of healthcare worker scenario, ERs, some general practice, but by and large, the type of professionals that we’re covering have been somewhat insulated from that and we haven’t seen a burnout problem play out in the way our block performs.
Now, the reason I think it’s important for producers to hear about that is we’re not taking steps to pull back on that, we’re not taking steps to say, “Oh, we’re going to place further limitations on mental or nervous or even drug and alcohol related disabilities,” where I know other carriers might be considering that, might be more careful about are they willing to quote rich plan designs on physician groups, even where they financially qualify for it. We have not had the impact from those trends play out, so we are not pulling back on those. So I think that’s an important thing for our producer community here.
James Crook (14:48):
It is interesting that our block seems to be unique because of the type of clientele we have, so that’s interesting. So you launched right into the second one of these, which was aging workforce, which is great. And that specific quotation you saw there was that the aging workforce is more likely to experience mental health issues, and the CDC estimates that 20% of people aged 55 and older will experience mental health concerns. So that’s interesting. And this third point we’ve discussed a little bit in your two trends, these rising healthcare costs. So something that’s interesting that we pointed out here in the article is even though the macroeconomic pressure of those rising costs may seem disheartening, we point out that employers can use a quality LTD policy as a recruitment and retention tool. But anyway, any thoughts on this specific trend beyond what you’ve already said?
Andrew Davison (16:01):
I don’t know. I think this it’s interesting, I can’t remember the source, but I did see an item cited today that actually… And maybe it’s not good news from a healthcare cost standpoint as much as it is bad news from a general inflation standpoint, but the increase in healthcare costs overall have been on a diverging downward trend versus overall inflation, where normally you think those things will at least move in parallel. And over the last probably 15 to 20 years, obviously healthcare costs have risen at a much higher rate than in general inflation rate. The article that I saw said it’s too early to tell whether that’s going to remain, if general inflation rates, which we feel like they’ve peaked, hopefully we see a continued leveling trend in healthcare expenses as well. Too early to tell really.
And just off the top of my head right now I’m thinking the way people look at healthcare may have change as a result of the pandemic, and maybe they’re going to be more cost conscious and thoughtful about, okay, when do I need to go to the ER versus I can wait that extra week to see my healthcare professional, or use telemed, which is a new thing that really took off during the pandemic. So maybe there’s enough things that have changed in the way that consumers look at the way to get healthcare, that it might lead to more reasonable trend in healthcare costs. I totally pulled that out of the air, so don’t book that and say it’s a thing, but it feels like maybe there’s some signs that the way that those trends move could change.
James Crook (18:04):
Thank you. Those are great points. So then this next trend was increasing frequency of mental health conditions, and we’ve talked about that in the context of the aging workforce, so I think we can skip over this one, except that I think it was really interesting that the AMA, the American Medical Association, did a study that found that nearly one in three physicians experienced symptoms of burnout, and that includes feelings of depression, anxiety, and hopelessness. So that just adds a good supporting point to what you were saying about the importance of disability coverage to include coverage for those types of conditions.
Andrew Davison (18:46):
And it’s important that producers look for our contract, it’s a per occurrence basis versus lifetime, that’s not necessarily the standard in the industry, so that’s an important thing, and it means that, okay, if a physician has to go out on disability for mental health concern, once they hit that 24 month limit, they can never get a benefit related to a mental health related disability again. That’s not the way our contract is set up. It’s a per occurrence, so if there’s a separate incident down the road, our contract would pay on that. So those are some of the nuances that producers should be thinking about, making sure that they pay close attention to.
James Crook (19:33):
You went way further into the weeds on our actual contract than I was going to, but for more information, talk to MGIS sales. And that’s a great point. All right. The last trend we had here was increasing use of technology, which seems obvious, but a quick point before I turn it over to you, we’ve been doing some research on enrollment, and we talked to an enrollment provider who works to help carriers and brokers achieve more participation, and he was saying that he figured that in five years, anyone who’s not providing support for platforms like Employee Navigator and some of these other tools would have a hard time competing, which I thought was interesting. I’m just curious on your thoughts, I’ve talked about enrollment, but any other increasing use of technology that might be changing the disability insurance industry.
Andrew Davison (20:52):
Maybe it’s not the mode of delivery as much as it is things like big data and looking at factors that we historically wouldn’t have paid attention to in helping us determine what’s a good risk or what’s maybe not such a good risk, things like driving records, credit score, I think there’s all sorts of things like that. Obviously, if you’re talking about medical health level underwriting like you do on an individual disability policy, use of prescription databases is not a new thing now at all, but I think that those are some examples of how technology and the collection of data, and the amalgamation of that data is allowing different approaches to risk management and risk assessment.
And it’s not just the fact that the metrics are out there. It’s there are going to be tools, there are some already that can extract that data and put it through a tool that gives it a score so that as an underwriter you don’t have to try to analyze it yourself. You have a tool that says this individual’s a 98, this individual’s a 56, and it’s based on consistent criteria in the tool. So those are the things I would see as impacting at least my end of the insurance spectrum, which is pricing, risk assessments, and that has implications down the road for things like what sorts of maximums do we offer, what sorts of extra benefits might we offer. So it’s all evolving.
James Crook (22:38):
Okay. Well, that’s interesting. I haven’t thought about that at all, so I’m glad you brought that up. That is [inaudible 00:22:45]
Andrew Davison (22:47):
I think you called me a genius early on, right?
James Crook (22:50):
I don’t think so.
Andrew Davison (22:50):
Okay. Well, maybe you meant to.
James Crook (22:51):
No, I meant to. Sure. Okay. Well, we’re out of time. Thank you, Andrew. I hope that the rest of your facial reconstruction goes well.
Andrew Davison (23:05):
Yeah, I think we’re all fingers crossed on that.
James Crook (23:08):
All right. Well, thank you. I’ll see you around the office.
Andrew Davison (23:14):
Okay. Thanks, James.
James Crook (23:15):
Andrew Davison (23:16):
James Crook (23:24):
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