Getting the Product Right Is More Than Innovation

Getting the Product Right Is More Than Innovation

Getting the product right builds trust between you and the consumer. But what exactly does it mean to get the product right? With varied industries throughout the United States, is the “right” product available in a one-size-fits-all solution? Perhaps not in the way you think.

Think about the boom of Silicon Valley back in the 1980s. Though popular companies like Apple and Atari moved into the San Francisco Bay area a decade prior, it wasn’t until the 80s that the area became widely known as the technological hub it’s still recognized as today. But have you ever wondered exactly why that is? What did these companies do that differentiated them from other industries at the time? And what are they still doing that sets them apart from the competition? The answer lies within their business model.

Because life is always changing, innovation has to constantly move forward. Let’s circle back to Silicon Valley for just a moment. Apple didn’t invent the computer. The first computer was technically invented back in 1822 by Charles Babbage, who originated the idea of a general-purpose machine that could calculate mathematical tables. Babbage thought there was a better, easier way of calculating several sets of numbers than existed at the time. Though Babbage lacked the funding to see his vision come to life, he left a blueprint for future innovators to follow. And they did.

In 1890, Herman Hollerith developed the internal recording system we know now as IBM. In 1936, Konrad Zuse created the first functional modern, programmable computer. The first computer to be able to successfully store and execute a functional program was developed in 1948, and then in 1949, Electronic Controls Company – the first computer company – was founded.

So, Steve Jobs, despite being an influential person in the computing industry, was one of many who took the blueprint first introduced by Charles Babbage and in turn, found a way to simplify these existing products to meet the company’s customers’ current needs that fit into their lifestyle. This concept is still at play today. The iPhone 13 Pro Max, for example, has received superior ratings due to its camera and video recording capabilities. With TikTok and Instagram Reels becoming the new wave of social media marketing, is this design just a coincidence? No, it’s meeting the customer where they are.

Meeting The Customer Where They Are

Getting the product right doesn’t solely mean improving upon certain widgets and technologies. Rather, it’s about meeting the consumer where they are in a way that understands their needs. After all, if you design a product that no one uses or can understand, how much growth can your company expect to see? The return on investment will be nominal at best and at worst, it could ruin your company’s reputation within the industry. Going back to Silicon Valley for a moment, there’s a reason why E.T. The Extra-Terrestrial video game produced by Atari in 1982 has been voted one of the worst video games of all times: it wasn’t easy to play, it wasn’t easy to understand, and it didn’t give consumers the kind of experience they were looking for.

When developing a product, it’s useful to reflect on what companies have done and succeeded in doing in the past, but you can’t simply rely on that. You have to take the blueprint and adapt it to your own model. And that’s what we’ve done. At Everlong, we reimagined and redesigned the current captive model used in the business liability world, modified its structure and improved its performance, enabling us to turn back the tide of ever-increasing medical insurance costs caused by lack of control and transparency.

Insurance Trends and Captive Stability

Recent trends have shown a major shift in regard to self-funding insurance plans – where the employer assumes the financial risk for providing health care benefits to its employees.

According to the Employee Benefit Research Institute, “between 2013 and 2017, the self-insurance trend for large companies declined. A rebound started in 2018 but did not hold in 2020.” The COVID-19 pandemic was the primary cause of the derailment. Conversely, smaller companies began to see increasing value in alternative group health insurance options.

During the pandemic, many employers were forced to shut their doors or furlough their employees. Even when operations resumed, the hit many companies took was so severe that it took time to adapt. While many furloughed employees were able to keep their health benefits, the rising costs of health insurance premiums during a time of upheaval left much to be desired. In 2021, the annual cost of employer-sponsored health insurance for family premiums increased by 4% and according to SHRM, employers can expect an increase of up to 5.2% in 2022.

This increase, coupled with employers’ limited resources and decreased demand for products and services due to mandatory lockdowns and other pandemic-related issues, caused a wave of concern (and volatility) for companies, both large and small. As a result, and with smaller companies in particular, they needed a better way to purchase group health insurance, with an increasing number seeking the stability of captive health insurance programs.

With a health insurance captive, businesses can reduce their taxes, select vendors that offer affordable drug costs to their employees, lower premiums, and provide employees better access to wellness programs – such as mental health or telehealth services, both of which saw a dramatic uptick since 2020. Further, this ability to obtain the right services at the right cost fosters employee loyalty, lowering the attrition rate and in turn, reducing the need for continuous talent acquisition, costly new hire training, and resource-intensive onboarding.

These real-world examples of evolving needs coupled with innovation adoption demonstrate what happens when you get the product “right”. Just like the acceleration of the modern computer, innovation occurs when new problems, needs, and ways of thinking emerge.

For example, since the rise of telehealth services, there’s an emergence of new educational training and resources being taught to medical students and healthcare professionals all across the country to identify how to engage with patients and implement care in new ways.

And it all starts with identifying your customers’ needs and creating the right product or service to meet them where they are.

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Commoditized Captives & Why “Elegance Without Warmth Is Arrogance”

Commoditized Captives & Why “Elegance Without Warmth Is Arrogance”

Commoditized Captives & Why “Elegance Without Warmth Is Arrogance” 

One of the most insightful business quotes is from Horst Schulze, former CEO of Ritz-Carlton, “Elegance without warmth is arrogance.”

Let’s unpack that for a minute.

During an interview with Knowledge@Wharton radio show, Schulze further explained that real excellence for the customer was individualization, rather than commoditization. And the reason why so many companies end up commoditizing, is their myopic focus on the bottom line. They became too big to navigate the nuances of their customers and made comprises on their product or service. As Schulze put it:

“Rather than make the soap a little smaller so you make more profit, eliminate your own mistakes. Work on your own processes and continue improvement and eliminate costs, consequently. Every time I eliminate a mistake permanently, I save money and improve my product at the same time.”

Let’s apply this line of thinking to the captive industry.

Perhaps this explains why some captive program managers rely on rate caps rather than proactive claims management? It should be no surprise then why rate caps are used most by the largest captive managers.

They have lost the ability (even willingness) to improve their product.

They will accept any employer and one size fits all because they’ve commoditized their captive structure.

You could even say there’s an arrogance to how they do business with their broker “partners.”

Here at Everlong, we believe in innovation and continuously improving our product over time. That’s why from the very beginning, with our first cell in 2010, we took the current captive model used in the business liability world, modified its structure, and improved its performance.

This approach continues more than a decade later and why we will never compromise our captive structure. Our commitment to excellence is another reason why there are no more than 50 members per cell within our high performance health insurance captives.

We don’t commoditize, we optimize.

Learn more about Everlong’s captive health insurance solutions.

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What You Need To Know About Captive Health Insurance [Part 1]

What You Need To Know About Captive Health Insurance [Part 1]

What You Need To Know About Captive Health Insurance 

2020 was a tough year for employers. The pandemic and economic shutdown presented companies with multiple financial challenges, and rising health-related costs only added to the problem.

Even worse, many companies now report that group health insurance costs are climbing at a faster rate than corporate revenue. And it’s not just the employers that are facing increasingly harsh headwinds; employees are struggling to cope with payroll deductions for insurance premiums that are further eroding their ability to make ends meet.

But the problem of increasing medical costs and insurance premiums existed long before 2020, the pandemic just highlighted and accelerated the awareness and severity of the chronic issue.

Now more than ever, employers are seeking new and innovative ways to break through the headwinds of today by catching the tailwind of tomorrow’s insurance solutions, like captive health insurance.

What is captive health insurance?

A health insurance captive is a wholly owned subsidiary insurer that provides risk-mitigation services for its parent company or a group of related companies. The employer, along with other similar-sized enterprises, sign up to become participants of the plan. As member-owners of the program, the participants all agree to spread the risk, using a stop-loss insurance model. This approach is designed to keep costs down over time while also reducing volatility.

Understanding the captive layer

  • Of your total specific stop loss premium, a high percentage flows through the captive layer
    • this amount is your potential dividend
  • Any claims over your specific deductible amount reduce your potential dividend
  • Large losses are no longer part of the captive layer once they hit your specific deductible amount (plus the maximum amount for your self-funded retained layer)
  • When you use all your potential dividend, you start using the rest of the group’s potential dividend as part of the captive layer shared risk
  • When all potential dividend is gone, collateral is reduced until depleted
  • When all collateral is gone, the captive has an aggregate policy that takes over

Captive Health Insurance Layer

The origins of captive health insurance

Many of the first employers to use the captive model for group health insurance were larger scale companies. With a larger workforce, these companies had both an incentive to change (increased exposure to expensive medical costs) and the means to do so (big enough to resolve internally). For example, in the last Milliman Research Report, more than 3,500 organ transplants were performed in the U.S. last year. If we extrapolate this data, a 200-life group can expect about a 58% chance of incurring a very expensive organ transplant within a five-year window, which is an incredibly short window of time in terms of financial impact.

The health insurance captive model enabled big companies to reduce financial risk and the amount their employees needed to pay for healthcare – additionally supporting talent acquisition and retention efforts.

Over time, smaller companies saw the advantages of the captive model and adapted it to suit their needs. They were able to overcome their smaller workforce by joining forces with other similarly sized employers.

Why does captive health insurance work so well?

There are several key advantages to being part of a typical captive health insurance arrangement:

  • Controlled drug costs. On average, approximately 25% of all claims relate to prescription drugs. With a health insurance captive, employers have the freedom to select a vendor of their choice (e.g., one that offers reduced costs and pays the rebates to the business).
  • Reduced tax and admin costs. Recent history shows premium tax lowered by 2%, and admin expenditure decreased by 5% to 9%.
  • PAYG model. Companies only have to pay for what employees use within the self-insured retained layer.
  • Wellness program access. There is increased focus on improving the health and wellbeing of employees to help mitigate and manage claims.

Does captive health insurance offer better value than traditional group health insurance?

Traditional group health insurance is broken. Consider for a moment how stop-loss insurance actually functions. The reality is stop-loss carriers are working for the benefit of their shareholders. Hospitals, carriers, and sub-par brokers are conflicted because they all gain when prices go up (which they have for the past two decades). This means employers (and employees) lose.

Stock Price Growth Since 2010

Source: https://www.beckershospitalreview.com/payer-issues/bcbs-parent-company-posts-1-3b-profit-in-2017-4-things-to-know.html

 

Captive health insurance provides a better way.

Better Control

There are two approaches to cost control, reactive and proactive. Traditional group health insurance is structured to “respond” reactively. This happens when the unanticipated higher renewal increase occurs and employers are back to that cycle of shifting costs around or moving to another carrier who is “buying the business” for the next 12 months. As a result, this ends up creating an even bigger problem at the next renewal. Nothing is being done to determine or actually fix the problem of what is causing higher claims.

Health insurance captives are designed to allow for proactive claim reduction efforts through innovative solutions to control plan costs and improve employee health. This forward-thinking framework provides the employer with the ability to exercise more control over costs by proactively improving the health outcomes of their employee population, resulting in lower claims overall.

Better Protection

To reduce volatility (unpredictable fluctuations in the insurance premium) and mitigate risk exposure, the captive has an additional layer (or buffer) between the self-insured employer and the stop-loss carrier. This means that the risk to any high-cost claims is spread across all members within the captive.

Better Profit Potential

The captive pooling structure not only helps reduce volatility and increase predictability for operational and budget-friendly control but also functions to retain excess premium accrued by the group (paid as dividends), rather than passing those profits on to stop-loss carriers.

Is captive health insurance right for your business?

Let’s zoom out and take a look at the bigger picture. A health insurance captive program encourages longer-term strategic planning and is designed to provide financial savings over time (along with improved health and lower costs for the employees). So, it’s clear that health insurance captives are the better way, but it can be less clear why one captive program manager is better than another.

Every business is unique, and captives are not a “plug-and-play” solution. There are important differences to consider before selecting the right captive program manager, which we detail in Part 2 of What You Need To Know About Captive Health Insurance. Stay tuned!

 

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Captive Stability Is The New Performance

Captive Stability Is The New Performance

Risk On

Prior to 2020’s black swan (low probability/high impact) event of the COVID-19 outbreak and subsequent shutdown of the economy, your clients had the luxury of being in a position to care less about volatility and risk exposure and only about the end result.

Today, however, your clients face economic headwinds that loom on the horizon, coupled with myriad tail risks that cannot be fully quantified or accounted for. It’s clear that the “risk on” days have fallen out of fashion and are largely behind us.

Risk Off

Looking toward the path ahead, we find ourselves heading toward a “risk off” environment, where your clients are increasingly demanding stability today and for the foreseeable future.
Within the backdrop of this new normal, it is not a matter of whether your clients will be impacted, but rather, how much they will be impacted and how well you have positioned them for success.

Stability Is The New Performance

Here at Everlong, we’ve developed a purpose-built high performance health insurance captive that’s nimble enough to navigate the foggy path ahead while designed specifically to help your mid-size employer clients achieve industry-leading stability and performance during these uncertain times—without having to cut benefits, shift costs to employees, or pay up.

MYTH:

  • You need to have an ocean of employers to achieve stability.

FACTS:

  • Everlong’s five-year average stop loss increase is just 3.9%.
  • No risk of future lasers, with 100% transparency and maximum stability achieved.
  • We achieve high performance and stability with no more than 50 members per cell.

And, after taking return of premium into account, our members are experiencing -6% renewals. As a result, your efforts transition from knee-jerk marketing and putting out fires to consulting on plan design and claims reduction.

With volatility and risk exposure increasing for your clients, consider not only what percentage of your book should be held in a captive, but the performance and stability of that captive.


We are partnering with forward thinking brokers that are providing their clients stability today.

Have you positioned your clients on terra firma?

PARTNER WITH EVERLONG

The Everlong Difference (Part 4): Invest More in What Works, Divest from the Rest

The Everlong Difference (Part 4): Invest More in What Works, Divest from the Rest

The Everlong Difference (Part 4):

Invest More in What Works, Divest from the Rest

In today’s economy, the allocation of resources provides little margin for error. It’s no longer sufficient to invest in what’s working today, you must also be able leverage analytical insights to successfully navigate what’s working tomorrow and just as importantly, what’s not working and should be divested from.

Reporting and delivering advice to your clients that’s actionable and effective can make or break a partnership.

That’s why we’ve partnered with Springbuk to provide you with full access to a powerful health analytics platform – and not just the “light” version. When it comes to health and financial outcomes, you need all the insights you can get to provide the best data-driven recommendations for your clients.

What is Springbuk?

Springbuk is a data analytics tool that enables an employer to understand specifically what variables are contributing to their claims. This includes identifying compliance gaps for chronic conditions and preventative care, along with the ability to forecast future claims spend within the population.

Program features include:

  • Insights – an analytics platform which identifies savings opportunities
  • Answers – a data analytics tool to dive deep into cost drivers
  • Standard and custom reporting options
  • Plan design modeler

Everlong offers the premier version to all members at no cost to help your clients understand their healthcare spend like never before.

Everlong Members

By participating in our high performance health insurance captives you can help your clients:

  • Customize health resources that are the most relevant and accurate
  • Types of wellness initiatives they should implement based on their employees’ health
  • Which vendor or partner types are best positioned to move the health and cost needle

According to a study by the Society for Human Resource Management (SHRM), nearly 90% of companies leverage healthcare benefits as part of their talent acquisition strategy.

Access to Springbuk will provide you with deeper insights into your clients’ benefits plan to identify areas of risk and implement countermeasures.

The key concept here is that Springbuk insights coupled with Everlong recommendations will help your clients invest more in what works and divest from what doesn’t.

There’s frankly no better way to improve your client’s condition than to implement this approach.


As the industry evolves, consider what percentage of your book should be held in a captive.

Invest in what works. Invest in Everlong and we’ll take care of the rest. 

Work With Us

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The Everlong Difference (Part 3): Use Positive Peer Pressure to Your Advantage

The Everlong Difference (Part 3): Use Positive Peer Pressure to Your Advantage

The Everlong Difference (Part 3):

Use Positive Peer Pressure to Your Advantage

We’ve all heard that peer pressure is “bad” and although that’s arguably true, there is new research that indicates how positive peer pressure creates a social advantage. And within the field of behavioral economics, human behavior is explained as being shaped by certain influences like social pressure.

This intuitively makes sense, right? What if there was a better way to purchase group health insurance?

There is a better way. And it makes sense, too.

Within our high performance health insurance captives, there are no more than 50 members (employers) per cell. This means your client truly gets to know their fellow captive cell members over time and yes … feel a little positive peer pressure as their fellow captive members improve their plans and reduce their costs. This social dynamic is a powerful force elevating the performance of each cell. 

What makes for an ideal captive member?

  • 50 to 500 employees on the medical plan
  • Fully insured or self-funded (and tired of it)
  • Few decision makers
  • Innovative decision makers
  • Appetite for claim reduction initiatives

Members also network continuously throughout the year, providing each other with timely input on existing and potential claims reduction vendors and other invaluable insights. Each cell also determines the location and format of their Annual Member Meeting (most recently Park City, Utah).

Member cells are led and managed by a seasoned Everlong consultant that has incentive-based compensation tied to the financial performance of the cell.

For employers that are members of the Everlong Captive, they are able to reinvest the profits that health insurance carriers make back into their business.

Walter Payton of the Chicago Bears once said, “We are stronger together than we are alone.”

It’s with that same team spirit in mind, camaraderie, and positive peer pressure in practice that we embody within the Everlong Captive. Build in your advantage today. Become an Everlong Captive member.

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Captive Stability Is The New Performance

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