Jeff Brunken, the President of MGIS, discusses several of the trends brokers should expect to see in the disability insurance market in 2024.
Welcome back to The Broker Advisor Podcast, our first episode of 2024. Today, thankfully, we have Jeff Brunken, the president of MGIS, here to talk to us about this 2024 Trends article that Alexandra Ginieres recently published on our blog. Before becoming the president of MGIS Jeff was a very, very successful medical malpractice broker. So he really gets the podcast, really gets what we’re trying to do here. So Jeff, welcome.
Jeff Brunken (00:34):
Thanks. Thanks for having me, James. It’s fun to be here.
James Crook (00:37):
Of course. And I mean, this is basically Jeff’s podcast because he owned MGIS, so it’s good to finally have him debut here in 2024. So Jeff, my first question for you is when you were a broker back before MGIS, what did you do then to stay on top of MGIS in the industry?
Jeff Brunken (01:01):
Yeah, so it was different back then. You didn’t have as much available online, if anything. I can’t remember… I think we had e-mailed, that was about it. So it was just different. So there were industry publications. For me when I was first a broker, med mal, MPL, Medical Malpractice, which prior to that I had been an underwriter for St. Paul. So I went from underwriting to brokerage. It was sort of new territory for brokers. I was in California and there were maybe 5, 10 of us brokering MPL, which was a great opportunity. But at the same time, we were all isolated unless we really networked. So there were industry publications that I really relied on, focused on either insurance or the folks we were working with, physicians, hospitals, healthcare employers, and so forth.
So from the very beginning, it really started me… It was a good habit to get into… What’s going on, but at the same time, networking was really important. And of course now you’ve got all this online stuff, but back then it was really more face-to-face business interactions, either directly with my broker competitors, we all knew each other or clients. Honestly, I learned probably more than anything else dealing with clients. You’d meet with them, understand what’s going on. They’d say, “What about this? What about that?” You’d have to go back and figure it out, and you’d really learn what was going on. Of course, there were quite a few events back then that were things you really wanted to attend, industry events with either industry specific or broker events. It was just a great way to stay in touch with everybody and you had to put a lot more time and effort into it, but that’s what we did back then. It’s different now. All this stuff’s available online. Networking’s completely different now. But from the very beginning, networking was important to me and that’s how I stayed current.
James Crook (03:29):
Excellent. Well, thank you. Well, let’s go onto the trends that Alexandra highlighted in the article. So the first one, and we’ve discussed this stuff before, but the rise in non-physician services. Alexandra noted that visits delivered by APCs, Advanced Practice Clinicians, we’re talking about nurse practitioners and physician assistants. The visits to APCs accounts for a quarter of all healthcare visits in the United States now. From 2013 to 2019, the share of healthcare visits delivered by APCs increased from 14 to 26%. So the question for you, what do you think insurance carriers need to do to accommodate this trend? What should any carrier that’s really focused on disability insurance, what should they do with that information?
Jeff Brunken (04:23):
Yeah, it’s good ques… First of all, it’s inevitable. It’s happening for several… First of all, it’s cost-effective. The growth in APCs is really to extend what doctors can do, the physician extenders first. Second of all, there’s quite a bit of advocacy out there. What nurse practitioners can do, for example, without the physician supervision and so forth. And that’s ongoing and you’re seeing quite a bit of change there. And that’s important to understand because for example, in our business, disability insurance, going to our contract… How we define definition of disability by actual CPT codes, these things… So as APCs expand and their roles expand, they are now for the first time ever appearing on bills.
So their incomes are increasing, first of all. So they’ve got more of an income replacement need, there’s more exposure there. And how you define disability for an APC is becoming very similar to how we’ve traditionally done it for doctors. When you receive your bill, your nurse practitioner could be on there now or several different types of APCs, frankly. CRNAs, the whole thing. So as that continues to expand, as APCs take more of an independent role in actual patient care, the ripple effect does extend to disability insurance and how protect income with our particular contract. So I think it’s important for insurance carriers to be aware of it, stay current, understand what’s going on. These are their clients, and your product development needs to keep pace with what’s actually happening out there. And again, in terms of income growth and expanding roles.
James Crook (06:36):
Absolutely. All of that makes sense, increasing incomes, and then also how defining disability needs to change to make sure that you’re accounting for them. If you were a broker right now, what message you’d be taking to the medical practices to make sure that they’re aware that, “Hey, your APCs, your nurse practitioners, you need to make sure they’re covered right too.”
Jeff Brunken (07:03):
Yeah, well, I think it goes back to… First of all, it goes back to something we’ve been talking about quite a bit here at MGIS, the whole physician shortage. It’s not just physicians, it’s healthcare employment. So any healthcare employer they’re dealing with, how do we best recruit and retain, it’s almost like college football. You got to re-recruit your players in today’s day and age-
James Crook (07:30):
Right, the transfer portal.
Jeff Brunken (07:32):
NIL and transfer portal. You got to keep your people, and one way to do that is through high quality benefits. It’s just not salary and so forth. And disability insurance is important to doctors. So I think if your broker, your client, the healthcare employer understands the importance of disability insurance and it understands what’s going on, not only with the doctors, but with the APCs as well as the rest of the employees. But particularly those demographics, keeping pace… Helping your client understand first of all the needs, what the contract needs to be doing to actually provide true protection, and how you can message that as an employer, that’s important. That’s where a broker can really provide extra value.
James Crook (08:31):
Right. Excellent. Let’s move on to trend number two, which was increase in wages, but because of the doctor shortage, supply and demand, physician salaries are going up. We just mentioned APC salaries are going up. In fact, Alexandra wrote that the average starting salaries are up 19% year over year for psychiatrists, 16% for dermatologists, 12% for anesthesiologists. I put 122% in my notes. That’s not right, it’s 12%. Your surgery just got a lot more expensive. No, it’s 12% for anesthesiologist and orthopedic surgeons and so on. So we touched on this a little bit, but Jeff, what do you think that means for the income protection needs for this group? All of these doctors?
Jeff Brunken (09:18):
Well, yeah, again, as incomes increase, how do you keep pace? So really your objective with disability, income, replacement insurance and so forth is to be able to replace 70% of the income. Well, as income goes up how do you really keep pace as a risk-taker, as the insurer on that? So the challenge really is making sure that as a broker, you’ve got different ways to do it. Any one particular insurance policy may have maximum benefits available. For example, individual doctors, they’ve got individual disability insurance policies. They may have maxed that out at X amount per month. And where do you go from there? I mean, once a doctor’s earning three, four, $500,000 a year, how are you really going to protect 70% of that income?
As a broker, you need to understand how that coordinates the individual versus group disability. Employers provide the group disability, the doctors buy the individual disability themselves. They’ve got to somehow have a view into what’s going on there. And yeah, coordinating different types of disability insurance, different carriers typically, different contracts, the whole thing to make sure that the doctors have that income replaced. But just because you’ve got the benefit in place doesn’t mean you’re actually protecting the income because what’s covered? What’s the definition of disability-
James Crook (11:06):
What is the definition of disability?
Jeff Brunken (11:08):
James Crook (11:11):
So I know there’s individual and group. Is there any other layer that a doctor could potentially put on that to get to 70% if those two aren’t enough?
Jeff Brunken (11:22):
Yeah, you’ve got Lloyd’s of London, for example. There are different outlets of individual coverage through Lloyd’s of London. You start getting into domestic insurers, Lloyd’s of London, they’re all great, but they’re just regulated differently. So people may not be aware or familiar with a Lloyd’s of London, which is an international insurer, how that works and so forth. But at the end of the day, they’re all additional layers of income protection. But again, the broker plays an important role there. If you’ve got X number of doctors in a group practice, you’ve got the LTD in place, who has individual disability insurance, and then where are the gaps from there? Not everybody would be eligible, for example, for an additional third layer. Certain doctors would be, but again, the broker can play a really important role coordinating this, helping the doctors understand not only what their needs are, but more importantly, where to find the third layer, the Lloyd’s coverage or whatever.
James Crook (12:41):
And MGIS does provide that third layer through Lloyd’s-
Jeff Brunken (12:47):
James Crook (12:47):
… in some cases, don’t they? Through the high limits disability insurance.
Jeff Brunken (12:51):
Yeah. We felt it was important to create our own version of that. For example, our LTD contract, our group long-term disability insurance, it’s unique. We’ve got unique definitions on there. So we wanted to make sure that there was a Lloyd’s of London contract. We wrote it. We created it to align with that. We wanted to make sure that there was an option available in the marketplace that would align. The individual, the IDI option, that’s separate. But yeah, our high limit product does align very closely with our LTD contract.
James Crook (13:35):
Right, with Disability Guard for Doctors.
Jeff Brunken (13:39):
James Crook (13:39):
Excellent. Okay. All right, moving on. We’ve also touched… I mean, all of these topics cascade into each other, but the doctor shortage. Having worked with you for four years now, this is one of your favorite subjects. The Association of American Medical Colleges says that the demand for doctors will outpace supply leading to a shortage of between 37,000 and 124,000 doctors. What can brokers do with that information?
Jeff Brunken (14:09):
Yeah, so first of all, I think it’s important to know why we have a shortage. It takes a doctor 11 to 15 years to get through education and training. Four years undergrad, four years in medical school, three to seven years of residency depending on the specialty, and then fellowship beyond that. So the pipeline, this is not like a one or two year fix. This is a decade long fix and not everybody makes it through. So a reason for the shortage, everybody’s got their thoughts. But my personal, I think it’s because of negative headline. I think for the past two decades, young people coming out of school have heard a lot of negative. It’s difficult to be a doctor, it’s hard, it’s this and so forth, and I don’t think that’s been helpful. But you combine that with the long pipeline and the shortage is not going away. I guess my point is it’s not going away overnight. It’s going to take a while to get doctors through the educational and training pipeline.
What brokers can do with that information… Again, I think it’s important for… So it depends on who the broker’s client is. If the broker’s client is an individual doctor and there are brokers, that’s their focus. I mean, they’re focused on the individual. I think they’re in a position to explain to their client, “Hey, this is actually a great time to be a doctor. Supply and demand. You have a good opportunity to negotiate a lot of things, including benefits, disability insurance is important as well as the rest of the benefits. Now’s a good time for that.” If the broker is working in the employee benefit space, the client is obviously the employer. Well, same thing. I think that broker has an important role to explain, “Listen, here’s what we’re seeing.” And of course, the employers know better than anybody, they’re on the front lines of this staffing shortage. They understand it.
So I think that the broker can play an important role just helping the client navigate through that. Just because there are different types of coverage and so forth, and some are higher it doesn’t always mean that the high quality coverage is going to cost more. So I think it’s important for the broker to really understand what the client’s looking for, what their objectives are, understand who’s out there, who’s providing, who are the markets. Disability insurance isn’t something that every broker focuses on. Your typical employee benefit broker, for example, they’re focused on… There are all kinds of coverages and disability insurance isn’t always what comes to mind first.
I had dinner several years ago with a broker, I won’t mention his name. He’s up in the Northwest, and I really was impressed with what he had to say. He said, “Listen, I’m an employee benefit broker.” He used to work for our carrier partner, our insurer partner. So he knew our product very well. He was very focused on the importance of disability. He said when he meets with a client, a new employer in the healthcare space, he has an important conversation. He’ll say, “Listen, we’re an employee… We do everything. We hand you our medical insurance, we ACA all this stuff. We do it all. But because you are a doctor practice disability insurance is really important to you guys.”
“So we’re going to do all this stuff, but I want your commitment now to have a separate conversation with me later just about disability insurance. We need to take care of all these big ticket, the health plan and all that, but I need to know that you’re committed with me to focus on disability insurance because there’s a lot to know, and we can do it the right way if we spend a little bit of time.” I thought that was… What that’s telling the client is, “Okay, this broker can handle all of our needs, but this broker also understands our business and he’s really going to provide value. This is going to be a real partner for us.”
James Crook (18:57):
Awesome. That’s a good approach, if anybody wants to steal that. Let’s move on to our next trend here, which is talking about burnout and mental health. Burnout continues to be an issue for doctors, especially during the pandemic. We’ve been out of the pandemic for a while. But what can brokers do to make sure that doctors have coverage that will make sure that the mental aspect, the burnout, is taken into consideration?
Jeff Brunken (19:26):
Yeah. Well, mental nervous is a big important part of the long-term disability or any disability income contract. The most important thing the broker can do is understand that part of the contract. So you’ve got the coverage limitations, you’ve got exclusions. What’s the definition of disability? What’s the benefit amount, the waiting period? How do you prove disability? Are there any treat requirement? There’s that whole… If a broker understands the mental nervous provisions within the contract, they can do a big favor for their client, helping them understand that. And again, there’s a lot of variety. So I think a broker, understanding the mental nervous… There are a couple of key things a broker can do to really understand the quality of a disability contract. That’s one of them. Understand it, understand what it says. The cream will rise to the top pretty quickly. That and the definition to disability and so forth. You don’t need to read the whole policy, but make sure you understand those key important provisions that are going to really make the difference between a claim being paid or the doctor thinking they’ve got something, but they really don’t.
James Crook (20:53):
Excellent. Thank you.
Jeff Brunken (20:57):
It’s important, because of what’s going on. We’re hearing more and more about burnout and I mean, there’s a lot of data out there that shows demonstrates burnout rates differ by practice setting. So depending on the type of setting the doctor… The bigger the setting… From what I’m seeing, the burnout rates are… What you hear about it, the independent practice is tough. It’s really difficult to run an independent practice and so forth. Yet what we’re seeing in the data is doctors in independent practice, they’re happier. It might be hard, but they’re actually able to do what they… Practice the way they feel like they should practice. And the bigger, the more corporate the setting, the burnout rates tend to be higher. And that’s what the data shows-
James Crook (21:52):
Jeff Brunken (21:55):
I mean, mental nervous is important. It’s a big issue these days.
James Crook (22:00):
All right, well, thank you. Our last trend, again, another kind of cascading thing. The lingering effects of Covid. We’re still learning about some of those impacts. I’m curious what MGIS has noticed about Covid and its impacts, if anything?
Jeff Brunken (22:16):
Yeah. Wow. So I can remember where we were sitting here early 2020 when I thought the pandemic would last three weeks. We were all scared to death, we didn’t know. What would be the effect of Covid on our clients? Who are… They’re all doctors and how would this affect claims? Are clients going to be able to stay in business and so forth? It was really interesting, and frankly, talking to reinsurers, talking to everybody, we work with actuarial firms, everybody had the same questions. It was the big unknown. And it was interesting as we went through the pandemic to see how quite a few things played out.
First of all, our block of business, which is comprised primarily of independent specialty practices, we really came through the pandemic unscathed. We didn’t see much. We had a few clients who had to furlough employees to get through it. You had hospitals, it was the… Gosh, what would we call it? The essential versus non-essential, where hospitals to reserve capacity for Covid patients had to basically close down for… They were only open for essential. So non-essential surgeries or elective and so forth, that all had to wait. So the ripple effect there, we didn’t have any clients who had to close their doors that I can think of, but we had some furloughed and we had to work with them on premium… We worked with people and so forth.
And from a claims side, we were all just waiting for the claims to come over the wall and just overwhelm the system and so forth. We really didn’t see much. I wish I could tell you exactly that we knew exactly what happened there. But again, we’ve kind of put our heads together with reinsurers actuarial firm, and we’re all sort of… Honestly, if we’re all being honest, we’re making assumptions. And one assumption we’re making is our clients are not hospital-based for the most part. They’re independent practice. So those doctors are pretty much like the rest of us. Throughout the pandemic, they were able to really distance, maintain protective measures and so forth. But to the extent doctors were practicing in a hospital setting, that was a lot more exposure.
So industry-wide, there was a huge impact. Not only disability, but life. It really damaged the industry. But the biggest assumption we can draw from the difference is our clients were independent. And the lesson we took from that was to the extent somebody’s practicing in a hospital setting where the front lines, you’ve got people who are sick, and those were the heroes. Those were the brave people practicing. That was where the claims happened. And long Covid as a result, so we didn’t see the DI or life claims, but from what we’re hearing from reinsurers who are on those exposures, we’re still sort of learning to understand what the long Covid impact is. It hasn’t been pronounced. It’s there, but it’s not like the catastrophic thing that, again, this was all unknown back in 2020. But as we all collectively progress through it, those are things that we learned.
James Crook (26:26):
Excellent. No, those are some interesting lessons for sure. And Jeff, we appreciate your time with us today. Those are all really interesting insights into these trends. We’ve covered all of them, so thanks for coming onto, I guess, what’s your podcast, and hopefully we’ll have you back again maybe in 2025.
Jeff Brunken (26:46):
Thanks, James. It was fun. It’s fun catching up.
James Crook (26:49):
Absolutely. Thanks, Jeff.
Jeff Brunken (26:51):