Moves by Canadian life and health insurance companies to contain rising costs are having a trickle-down effect on the country’s paramedical industry. But officials from two of the paramedical companies say their firms are preparing to meet the future.
Employees of Canada’s five big paramedical companies make up “a small, but very important role in trying to insure Canadians,” says Nancy Kent, vice president, sales and marketing at Quality Underwriting Services Ltd. (QUS), the second largest paramedical provider in the country by volume and 1,000 health professionals coast to coast.
Paramedical employees are called in by insurers to determine if potential clients meet the insurer’s requirements for life and health insurance products by conducting face-to-face interviews and taking samples, including blood and urine, as noting a person’s vital statistics, among other duties. Paramedical companies get paid for every order an insurance company requests and use that revenue to pay their paramedical examiners and administrative and executive staff.
Feeling the squeeze
But like all companies, insurers are looking for ways to cut costs and the paramedical industry is feeling the squeeze.
“There’s no question about that,” says Steve Kambasis, vice president, client support and business development at Watermark Insurance Services Inc. “Whenever we come to the table, one of the main strategies insurers are looking for is support on how they can reduce costs. So they work with us to help make efficiencies between both companies as strong as possible so the costs can be pushed down.”
Over the past few years, Kent says many insurers have changed the health requirements for certain products, like life insurance, doing away with blood and urine requirements for life insurance policies under $250,000. As a result, the number of orders for paramedical service providers has dropped.
Some insurers are starting to realize that they may be pushing the envelope a little too far by continuing to make cuts that affect paramedical services, says Kambasis. There are situations, he says, where VIP treatment may be called for cases of high net-worth clients seeking $5-million life insurance policies, for example. But with ongoing reductions, it might be difficult to match the higher level of expertise necessary to perform the level of service required, he says.
At the same time, insurers are cutting back on the number of paramedical vendors approved to do business with them. Each company must be approved, typically for a year or two and each time renewal time comes around, they have to submit proposals, says Kent.
Over the last few years, insurers have decided not to work with all five large paramedical vendors, opting instead to deal with just two or three to get volume discounts, she says.
The move by insurance companies to bring in more simplified and direct-to-consumer products with lower face amounts and fewer requirements has also translated into less volume for paramedicals. But Kambasis says insurers need to be careful that in their efforts to attract more clients with simplified insurance, they don’t bring with them those who will be detrimental to their bottom line. If an insurer changes its policy so blood tests would not be ordered for a $500,000 policy, for example, it could risk attracting less-healthy clients. “So it’s a bit of a balancing act.”
Despite the setbacks, neither QUS nor Watermark has reduced staff numbers. In fact, Kent says staff at QUS may be up as they hire paramedical professionals who can better meet the demands of a changing demographic. (There are no national statistics on the size and volume of business conducted by the paramedical industry in Canada.)
QUS has hired nurses and lab technicians from a variety of cultures, in addition to those who speak English and French, for both rural and urban areas. The company has also introduced new technology, like a 24/7 online ordering system so insurers and advisors can go online to order a service. It’s also produced one-minute preparation videos in English and French for applicants to tell them how to get ready for an appointment and how long they can expect it to last. As well, QUS is bringing in a tablet version of a paper paramedical form so the information goes automatically to the insurance company rather than waiting until the paramedical professional gets back to the office.
Some insurers and paramedical companies also offer phone service to talk to a potential client rather than sending out a more costly nurse to a client’s home. The insurance company will then tell the paramedical company whether they want any services done, says Kent. “It’s cheaper doing a telephone interview for us rather than send out a nurse to do that service. Some insurance companies are doing more telephone interviews than the traditional paramedicals.”
Watermark and its sister company, BW Underwriting Services Inc., total 130 people: the paramedical side represents about 20 per cent of their business, while the rest stems from its APS collection services of reports from applicants’ doctors, health and wellness services and the specialized underwriting business. The underwriting expertise is a benefit Kambasis says is unique to the industry and one that the company believes gives it an edge over other vendors.
“We are focusing on the strategic vision and the underwriting aspect,” says Kambasis. “I think insurance companies are now viewing vendors more as strategic partners rather than just vendors that provide a commodity service [ie strictly paramedical services].”
Watermark is also making further entries into the health and wellness arena, including diabetes clinics and testing for occupations like truckers who must complete certain tests to ensure they are drug and alcohol free.
But not only do paramedical companies have to keep their name and services front and centre of insurers, they also go out to MGA meetings and to advisors, often providing seminars for CE credits.
Kent says clients trust advisors to guide them for their insurance and investment needs and assume a paramedical service will be conducted in a professional manner. But if there’s a glitch, the client may end up complaining to the advisor.
“The paramedical industry is a very competitive business,” says Kent. “We really grow our business based on fast time service and high quality and if one of those is missing, it’s tough to get an advisor back.”
Down the road, Kambasis foresees continuing consolidation in the MGA industry, more direct-to-consumer products and fewer underwriting requirements for health and life insurance, all of which will continue to put a dent in revenue for many paramedicals. “Ten years from now, I think we will see the disappearance of paramedicals,” he says. “Lab work may be a thing of the past or will be in a different form.
“There will definitely need to be a transition of the vendors and services that will be provided to the insurance companies, that’s for sure.”