Product Portfolio Management is enhanced by understanding how different benefit packages interact with Persistency of the main offering. Health Plans who are or are considering offering ancillary benefits gain from knowing the lift provided or not provided by ancillary benefits. It’s a simple measure: How many customers were present at the beginning of this period who were also present at the beginning of the previous period? Customers lost represent higher replacement costs and an inhibitor to growth.

We measure persistency over one-year intervals for four years to assist our clients in answering these questions:

  • What product combinations have the strongest persistency?
  • What is the persistency lift created by ancillary products?
  • Can we identify the specific ancillary products that associate with improved persistency?
  • What is one point of persistency worth in terms of revenue to the enterprise?
  • Can we explain variation in persistency?

In our practice, some general associations appear to be consistent:

  • Adding ancillary benefits to a medical product increases persistency of the medical book
  • Persistency relationships for various ancillary benefits is different for large group vs. small group
  • Persistency curves react to operational problems, pricing, and market conditions
  • There is a strong correlation between the presence of ancillary products and higher persistency

The Nolan Company offers a baseline Persistency Study, which provides tools for clients to continue the study on a quarterly basis. Clients also receive a Persistency Model, using their financial statements as input to test impacts of persistency assumptions on revenue and expenses. The baseline study is conducted in approximately four (4) weeks with a non-HIPAA data set.

To arrange a time to talk with a Nolan expert about persistency, please contact us. 

 

Additional Articles:
The Power of Persistency

Nolan Offerings:
Nolan Persistency Modeling