MetLife to Exit Individual Disability Insurance Market

MetLife, Inc. the fourth largest provider of long-term disability insurance by market share[1], is suspending sales of its individual disability insurance policies.  In an internal memorandum to producers, MetLife Client Solutions Senior Vice President Kieran Mullins announced that the company would be suspending the individual disability insurance block of business effective September 1, 2016.  In the memo, Mr. Mullins cites the goal of creating a new U.S. Retail organization for its insurance products and the “difficult, but strategic” decisions that led to the shutdown of their individual disability insurance product:

This was not an easy decision to make, given the growth and strength of our IDI business. However, we believe it is the best course of action for the immediate future. While there is tremendous opportunity in this market, the suspension provides us with the time and resources needed to properly separate the U.S. Retail business from MetLife. There is a significant amount of work to be done to retool existing systems – and implement new systems – that will ultimately provide the most value to our customers and sales partners in the years to come.

Insurance news websites are already speculating that the shutdown could put pressure on the remaining thirty-one companies selling individual disability insurance to raise premiums.  Because MetLife controls such a substantial share of the individual disability insurance market, their departure effectively reduces the size of the pool in which the risk can be spread.  Cyril Tuohy, writing for Insurancenewsnet.com, points to the move as an opportunity for the remaining companies in the market to innovate and attract the business MetLife will be leaving behind.  The company’s departure will favor the insurers whose individual disability policies cater to physicians, dentists, and other high-income professionals, such as Guardian, Principal, The Standard, Ameritas and Northwestern Mutual.[2]

In an accompanying FAQ, MetLife assured producers that existing policies would not be affected by the change, and that they would continue to support policy increases by the terms of the Guaranteed Insurability Option, Automatic Increase Benefit, and Life Event riders.  The memo also noted that MetLife would continue sales of its group, voluntary, and worksite disability products.

It is important to remember that even though MetLife must continue to service its existing policies, shutting down sales of new policies can still affect current policyholders.  Absent the need to sell new policies, an insurer may have less incentive to provide customer service or avoid a complaint from the state insurance board.  Additionally, once a block of business closes, the easiest way to maintain profitability of that product is through claims management.  In real terms that is typically accomplished through claims denial and benefits termination.  We discussed these very tactics in a 2012 blog post about Unum’s management of its closed block of individual disability insurance products.

If you have a MetLife individual disability insurance policy, pay close attention as the business focus shifts away from selling new policies and toward the management of existing policies.  If you have a question or concern regarding your MetLife policy, contact our office.

[1]http://www.statista.com/statistics/216499/leading-long-term-disability-insurance-carriers-in-the-us/

[2]“Will MetLife’s Suspension Send DI Prices Soaring?” Cyril Tuohy, insurancenewsnet.com. http://insurancenewsnet.com/innarticle/agents-split-di-pricing-wake-metlife-suspension

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Disability Insurer Profiles: MetLife

Today we’re profiling another popular insurer that issues private disability policies to dentists and physicians: MetLife.

Company: Metropolitan Life Insurance Company, a.k.a. MetLife.

Location: New York, NY.

Associated Entities: MetLife, Inc. (parent company), General American Life Insurance Company, New England Life Insurance Company.

Assets: MetLife, Inc. held over $885 billion in assets as of May 2014, according to Forbes.

Notable Policy Features:  One thing to watch out for in MetLife policies is a limitation on benefits for mental disorders and/or substance use disorder.  Under the Limited Monthly Disorders and/or Substance Use Disorders provision of some MetLife policies, policyholders are only entitled to a total of 24 months of benefits for any mental or substance abuse disorder, such as depression, panic disorder, post-traumatic stress disorder (PTSD), bipolar disorder, and alcohol abuse or dependency.  The 24 month limitation is cumulative.  So, for example, if you have depression that disables you for 23 months, then start suffering from disabling alcohol dependency later in your life, you would only have one month of benefits still available to you.

Claims Management Approach: In its 2013 Annual Report, MetLife, Inc. reported that “unfavorable morbidity experience in our individual income disability business resulted in a $6 million decrease in operating earnings.”  In other words, in 2013, more private disability insurance policyholders experienced disabling illnesses or injuries than in years before, and that hurt MetLife’s profits.  In these situations, where an insurer is facing increased liability for benefit payments, we often see that insurer put additional resources towards managing claims.  In this way, the insurer can spend extra time and effort looking for ways to deny or terminate claims, with the goal of limiting its liability.

In our experience, one way that MetLife attempts to dispose of claims as quickly as possible is by ordering surveillance early on in the claim.  While some companies will wait until they have received more information before starting surveillance, MetLife has started following and videotaping claimants within weeks of the claim being filed.

With respect to its medical investigation, we have found that MetLife often follows a similar strategy to MassMutual’s.  The insurer will often attempt to have its own medical personnel schedule “peer-to-peer” telephone consultations with claimants’ treating physicians, with the aim of catching the treating physician off guard and persuading them into saying their patient isn’t disabled.  However, we have found that, in certain circumstances, MetLife can be amenable to submitting medical questions to the treating doctor in writing instead.  That way, the treating doctor can more carefully consider the issues, without feeling pressured or put on the spot.

 

These profiles are based on our opinions and experience. Additional source(s): MetLife’s 2013 Annual Report; Forbes.com

Authorization Forms:
What Information Are You Releasing to Your Disability Insurer?

Whenever you file a claim for benefits with a disability insurance company, you will be asked to complete numerous forms.  One of these forms is always a HIPAA-compliant Authorization. This form is titled differently depending on the insurer in question, for instance:

  • Authorization to Obtain Information (Guardian/Berkshire)
  • Authorization for Release and Disclosure of Health Related Information (Sun Life)
  • Authorization (MetLife, Unum, Northwestern Mutual)
  • Authorization for Release of Personal Health and Other Information (Principal)
  • Authorization for Release of Personal Health-Related Information (MassMutual)

Claimants often sign the Authorization with little more than a quick glance, unaware of the broad power they are giving their insurer to investigate nearly every aspect of their lives. This may seem like an exaggeration, but take a look at this paragraph from an actual Authorization form required by one of the leading disability insurers for doctors and dentists.

Many claimants think that the Authorization simply allows the insurer to collect medical records.  However, this Authorization, like those we typically see from other disability insurers, lets the company request all kinds of documents from all kinds of people and agencies.  It also allows various company representatives to speak directly with numerous people in a claimant’s life.  Let’s examine what you would authorize by agreeing to this one paragraph:

Continue reading “Authorization Forms: What Information Are You Releasing to Your Disability Insurer?”