Don't be surprised if the topic of direct health insurance is covered soon in the pages of Insurance & Technology. As Norvax (the company behind gohealthinsurance.com) SVP of business development Fred Karutz told me recently: "Every major insurance company is looking at the individual market and how they are positioned from a product, distribution, ease of doing business, technology and branding [standpoint]. There is a realization with most insurance companies that you have to take off your 'group hat' when you're talking about the individual marketplace because everything is different."As insurers figure out the individual market for themselves, new competitors are emerging from obscurity. NextStudent -- a student loan firm that has, well, suspended its student loan business in the midst of the country's recent economic struggles -- announced recently that, along with an unnamed partner, it will begin to offer short-term health insurance to college students and recent graduates.
From a press release:
Recent graduates may no longer be eligible for coverage under their parents' health plans, and with unemployment at a five-year high and companies continuing to cut back expenses, it will likely take longer for new graduates to find jobs with health benefits. Families with children still in college may find NextStudent's student health plans offer better coverage and are more cost-effective than some school or family health plans.
"We're expanding our reach and taking on different business lines to assist our core customer base as we wait for the right time for us to re-enter the student loan market," said Jack Wallace, Executive Vice President.
Perhaps one big difference in how the individual market will develop will be the emergence of niche players like NextStudent. Traditionally, health insurance hasn't been marketed to individuals, so it's possible that health insurers aren't as adept at reaching targeted segments of the population as they could be. As the individual market emerges, however, that will have to change.
Even as employer-provided health care declines, it remains the dominant channel through which Americans receive coverage. As a result, success in the individual market will depend not upon reaching the broadest possible audience, but upon successfully targeting certain segments of the population that are most likely to be seeking individual coverage.
To this reporter, NextStudent is a relatively unknown company. That certainly doesn't doom the organization's chances in the individual health market. It does, in my opinion, limit it in certain ways.
College students and recent grads (and indeed many from other demographics) are very likely to prefer to purchase individual insurance online. They trust the Internet as a distribution channel, but that doesn't mean they trust any organization that pops up in a Google search.
This is where established insurers need to capitalize. If they are able to develop strong and functional web presences around individual health insurance quotes, a few established carriers will be in position to leverage their trusted brands and become an early leader in a developing market. While some are on the right track, I don't think any such carriers have emerged. Many have partnered with sites like www.ehealthinsurance.com and the aforementioned www.gohealthinsurance.com, but I think it will be more interesting to see what happens when a big carrier ventures out on its own.Perhaps one big difference in how the individual market will develop will be the emergence of niche players. Traditionally, health insurance hasn't been marketed to individuals, so it's possible that health insurers aren't adept at reaching targeted segments of the population. As the individual market emerges, however, that will have to change.