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Doug: Welcome to the Everlong Edge Podcast. I’m Doug Truax, founder, and CEO of Everlong. So, in this episode, we’re gonna be talking to a very special guest of ours, a great broker that works with us, Craig Stubler. So, I’m gonna get to Craig in just a second, but I want to cover the topic, to begin with here.

So, we’re gonna be talking about organ transplant coverage today. And so, when you think about this topic, and when it comes to organ transplant, there’s really three categories of captive managers now: there’s those that hope, those that believe, and those that know. But before I talk more about hope, believe, and know, let’s kind of level set on what you and your clients can expect regarding organ transplants.

So, I don’t know if you’ve seen it, but in the last Milliman Research Report, more than 3,500 organ transplants were performed in the U.S. last year. So, from an actuarial standpoint, if you take some of that data and you kind of extrapolate it across a group size, you can have a 200-life group, can expect about a 58% chance of incurring a very expensive organ transplant within a five-year window. So that’s a pretty short window of time, and that’s a pretty typical group. So, it’s something to really think about.

So that’s what we know. And because we know that, that’s why all, and not some, but all of Everlong’s captive members carry organ transplant coverage. And no one else is doing this. Everyone else is hoping or believing that it won’t happen to their group. And if an organ transplant is incurred, they’ll just kind of subsidize that cost across everybody else in the captive layer. So, that’s not a good spot to be in.

So look, when it comes to your organ transplant coverage, everyone partnered with Everlong has a life jacket on, while other captives don’t, and are at risk of drowning and subsidizing, or worse. So when you and your client are sailing the high seas of risk and volatility, do you want to hope you both have a life jacket, believe you do, or know that you do, when an organ transplant capsizes your year or maybe even beyond?

So let’s go ahead and bring in today’s special guest, Craig Stubler, to discuss this and a little bit more. All right, Craig, really happy you’re here, thanks for coming on.

Craig: Hey, Doug. Hey, thanks for having me here. It’s great to be in your studio today.

Doug: Yeah, good stuff. So, when we were talking about this organ transplant piece, you’re one of the first guys that came to mind, because it’s kind of like how we all got associated on the Everlong side. You and I have known each other for a while. But when it comes to, you know, bringing a client into Everlong, it kind of was a little bit of the kind of nexus of how this all began with you. So why don’t you get into that a little bit? De-identified, of course, I know you’ll do that, but yeah, tell us about it.

Craig: Yeah, so I had a client in another captive, and it was kind of my first experience in captives and learning. There’s a lot of different moving parts in captives, obviously. And coming across an unfortunate situation when you have a transplant situation going on and finding out, is there coverage, what’s going on? Then you dig a little deeper and peel back the onion and you discover, as a captive, do you have this policy for everybody, some people, not at all? And when my client went through it, that’s some of the things we discovered, which was being in a captive where some had it — actually, most didn’t — and the dramatic effect it can have.

Doug: Yeah, for sure. And that whole concept about some having it and some not having it, everybody’s got to take their lumps at some time. And you took some lumps, a little bit, on this deal when you moved it. But that’s the whole reason we ended up doing the organ transplant on all of our groups, because there was a window of time where a lot of them had organ transplant coverage, and a couple didn’t. And I remember distinctly having the thought, and we had the conversation internally, “Maybe we should have everybody on organ transplants.” “Nah, we’ll worry about it later.” This is years ago, right. And sure enough, Murphy’s Law, that Murphy guy is always lurking.

Craig: Right.

Doug: The folks that didn’t have the organ transplant coverage, started getting them, and it started hitting everybody. And so, when you figured all that out — you know, we talked before we began here about kind of — it’s a little bit like a new space, right, and you’re trying to — “What going on with captives,” and everything like that. So, what was your thought process when you’re like, “Oh, this is not good.” What started happening after that?

Craig: Well, when you go through that whole learning experience — and again, you just do more research on the captives as a whole and what’s going on. And then obviously, we talked and you said, “Hey, our captive, you have to have the transplant insurance.” And I said, “That’s a brilliant idea.” Everybody should have the same protection in there, because otherwise, how could the captive really run the way you want it to when some are protected and some aren’t?

And so, to me, when we had talked, and it was like an “aha” moment for me, going, “That makes total sense. Like, why wouldn’t they all operate that way?” And actually, most don’t. And that’s why I went to my client and said, “We got to switch captives because Everlong has protection for everybody.” And they, going through that, said, “Well, that makes sense.” So, it does.

Doug: Yeah. And I should probably know the answer to this question before I asked this. I think I know, I can’t remember specifically, but when we were working with you, and we did add on the organ transplant, there was an element of the specific premium did come down, because you do have the organ transplant now going in —

Craig: Correct, yeah.

Doug: There’s an offsetting piece to this, right?

Craig: Right.

Doug: Yeah, so for the client, it’s like, “Oh, yeah, great. Let’s do it.”

Craig: Right. It made sense in a lot of different ways. But again, going back to the whole scenario, and you think about it, and even talking about life jackets and not having life jackets, it does make sense that everybody should have the same coverage, and it better protects the captive, and actually, at the end of the day, it gives a better chance of everybody reaping a nice giveback.

Doug: Right, right. And I think that that’s been at the heart of our low renewals that we’ve got a track record on — this and other things. I’m gonna get into more specifics on the differentiators in other podcasts, hopefully, have you back on at some point and talk about other things too. Once you take the organ transplants off the table, from an underwriting standpoint, that’s a pretty helpful thing.

Craig: Right, that’s like —

Doug: You know? It’s like, “Well, okay. Well, we don’t have to worry about that.” And it’s like to your point about the life jacket and everything that I was talking about in the intro. If you have one situation like this, or just even two, and you just — they zoom in through the captive layer and beyond, you gotta start spreading that across to everybody. And then you have folks — like what we’ve been talking about, it’s like, “Okay, so we have half the people buy organ transplant coverage, and now they’re gonna pay for somebody in the other half that didn’t buy it.”

Craig: Right.

Doug: Where’s the justice in that? Yeah, that’s another reason we went and did it. What did your client think so far?

Craig: They loved it. Honestly, it made sense to them. I think it was more a peace of mind knowing that, not only are they covered because they went through it, but just to know that everybody that they’re partnering with, in the captive, also has it, so everybody’s at the same level of protection. Because these aren’t small claims, they’re close to half-billion-dollar claims. So when it hits, it hits big. So, they’re very happy with it.

Doug: That’s right. And I covered, in the intro, that piece about a 200-life group having that 58% chance in a five-year window of getting an organ transplant. And our average group size is about 170 employees, something like that. But then you say, “Well, in ourselves, we cut them off at 50 employers,” so that everybody knows each other and everything like that. But you start spreading, you get that number even bigger — across 50 groups about that size. Now the Milliman data says, “Well, you’re gonna have some stuff, and if you can put it someplace else, under organ transplant coverage, it’s fully insured,” everybody’s gonna win, to your point. Want to get to that owner meeting and say, “Hey, we avoided these things.”

Craig: That’s right.

Doug: Absolutely. So, yeah. You know, one of the other things that I’ve been talking about too, and I think this is one of the things we discussed when you came in as well, and it’s going to be a topic on another show, is that another we don’t do is we do not put the aggregate policy in our captive layer. It’s just a specific premium. And most people would say, “Well, that’s not a big deal, it’s not a lot of premium.” You’re right, it’s not a lot of premium on the agg coverage, and the claims are low at 125% of expected. If, theoretically, somebody was lowering the max down to 110, or 115 to get groups in, well, then you got a much higher probability of people going above the max and into the captive layers.

Craig: Right.

Doug: So that’s another thing, from a financial standpoint. Your group’s pretty savvy like that. We’ve talked about these things, so they’re tracking on that as well. So, just from a financial standpoint, that’s another thing to keep in mind, too. So, what do you think overall, in terms of the whole Everlong thing? Any other thoughts that you’d like to share about how your group is — I haven’t talked to him in a little bit, but I’m gonna see him soon.

Craig: Right. Yeah.

Doug: They’re having a good time, right?

Craig: Right.

Doug: As good as you can with medical insurance, right?

Craig: Right. It’s such a riveting topic, right?

Doug: Yeah, exactly. Right.

Craig: No, as far as clients’ perspective, they’re very happy in just the progressive thought process of how this captive is run. So, the protections, and again, at the end of the day, it’s all the protections to help the captive run better, which, does what? Gives more money back to the employer. So that’s the bottom line of it. I think, just again, the way you’re putting different things, levels, in place — As a broker, I don’t know how many captives are out there now, you lose track, there’s so many moving parts, and a lot of them don’t want you to know the moving parts. Where I feel like the way you’re running this captive, everything’s transparent, it’s right out in front, you’re not afraid to say, “Open up the books and look at everything.” There’s no hiding. It’s all done on a great level. And I think that’s why the experience of the captive has been so well run.

Doug: Yeah, thank you. I appreciate you saying that. We didn’t rehearse this, we didn’t talk about that. But, you know, that’s one thing I’ve covered before in the other pieces is, there was a time early on, where you’re like, “Well, you can be completely transparent about things or you can kind of like, move cards around –“

Craig: Shell game.

Doug: You know, “See what’s going on over here. Don’t look over here,” you know, all that stuff. But I figured too, on that front, because there’s always going to be high claimants, there’s going to be stuff.

Craig: Right.

Doug: We’re not just saying, “Oh, you come in and there’s no high claimants anymore.” There’s always going to be some things, but if every employer and broker in the captive cell is working on reducing the claims and doing different things, and it’s fully transparent, then everybody will see, “Well, okay, I see what happened there. All right. Now we’re gonna do this to fix that.” And it’s like a constant improvement, you know?

Craig: Right.

Doug: Because there’s things always coming up, you know, you gotta do this, that, and the other thing. But that transparency is the piece that I think, especially for a group that — I think that one group that we were talking about, of yours, they hadn’t been self-funded all that long. And I think that when they get to that place where they go from being fully insured to self-funded, and then to being a fully transparent captive like ours, they’re like, “Wow, there’s a lot of stuff.” But it’s good. They get to see it all, right?

Craig: Right.

Doug: It’s all right there, I guess, the moving parts.

Craig: Right. It’s like the curtains on the big front window are finally open and you can see everything inside. You look out, you look in the captive, there’s nothing hidden, everything is explained really well. So there’s no shell game, there’s no moving parts. And I think that’s super important when you’re bringing it to clients that are fully insured, that are going to take this step — this leap of faith into the process in the long term strategic planning of it — that everything’s out on the table so they really see it. And it gets easier for us to explain it to them, it’s easier for them to get it. They understand.

Doug: Yeah, big time. And I think that’s what we’ve needed in this industry for so long, is transparency.

Craig: Yeah, right.

Doug: You know, you and I have been this for a couple decades, right?

Craig: Right.

Doug: And it’s always, you get to that place, as a broker, you’re like, “Why can I not explain this to my group, they just spent a million dollars on medical insurance.” And it’s like, “Well, don’t look over there, just take the 10% increase.” It’s like, “No, no, no, I’m sick of this.”

Craig: Right.

Doug: And the CFOs are saying the same thing. Obviously, self-funding is the way to go, but then, our proposition on the whole thing is, you get in a captive and you can see everything and understand what is going on inside the captives. And one more thing I wanted to cover before we finish up is that — you had this kind of like “aha” moment about this thing on the organ transplant, but something that we’ve talked about before too is that — we’re definitely in a space now where all the brokers out there, the good brokers like you, they’re like, “Hey, I gotta do something good for my client here.” Everybody’s trying to figure out the captive space now. You know, who does what, and why are they do — because in the beginning, it was like, “Oh, this is cool.” And I’ve been doing this since we started the first captive cell in January 1st, 2010, so I’ve been in the space a long time. And then, so people got used to certain things, because it was, “Oh, that’s what I’m used to.” Now, at this period of time, when everybody’s like, “What are the differences on these things?” Right?

Craig: Right.

Doug: And so, everybody’s trying to figure it out. So, that’s why we started this series and started the organ transplant. And I think this transparency thing, some other stuff are the differentiators, and you’re kind of seeing some of that stuff as we go along here.

Craig: Right, right. I think that’s the most confusing part for a lot of brokers who are, maybe new in the space, is there are a lot of pathways, there are a lot of choices. They’re all run differently. Most are not transparent, I can tell you that myself. So, you really have to be careful on that. That’s what I’ve appreciated, working with you and your team here at Everlong, is that you guys throw everything out there. The conferences are great. And it’s great, I think, that clients get to — I’ve been doing this for quite a long time and everybody wants to be in a pool, they always talk about pools. This is your opportunity to be in a pool. And then you get to see everybody once a year, and talk to them, and understand, “What are you doing for wellness, and how are you keeping your claims down?” And they all want to share, because you’re not competing. It’s a really cool [14:43 – crosstalk]

Doug: Right. They all see each other and, like, “I don’t want to …” They all have that feeling of, “I don’t want to be the one that’s doing the least.”

Craig: Right.

Doug: “Let me do a little more.” And it actually helps, because they do see each other, and they get to know each other, which is huge. And I think a lot of that transparency — I keep coming back to differentiators that we’ll cover in later episodes. You know, one of the things on that shell game thing, too, is the compensation piece. We’re on a PEPM, and that’s it. No other things anywhere else. But we start talking millions of dollars per client and what they’re spending, I think it gets — almost, simple it, sometimes. If you’re not transparent, how to move money around and put this over there, and stuff.

Craig: Right.

Doug: And there’s compensation built in there and stuff. And so, it’s like, “I don’t know how that’s gonna work out.”

Craig: Right.

Doug: So I’m sure we’ll talk about that at a later date too. There’s lots of differentiators we want to cover. But hey, look, thanks for being a good broker for your group there. These guys that you’ve got in the captive right now are awesome, and I look forward to getting some more in one of these days.

Craig: Yeah. We’ll have some more coming in this year, looking forward to that.

Doug: All right, Craig. Thanks for coming on.

Okay, well, that’s our show for today. Thanks for tuning in. We’ll see you next time on the Everlong Edge Podcast.