Are Voles and Moles Eating Your Profits?
When Clerks Make Marketing Decisions
Dec 8, 2005: Vol. 1, Issue No. 54
Penn Treaty Network America Insurance Company
Dear Mr. Hatch:
We would like to take this time to confirm your interest in applying for reinstatement of the above referenced policy and receipt of your check number 1610 in the amount of $199.11. We now require a completed reinstatement application to accompany your payment and, therefore, we are returning your check and are enclosing an Application for Reinstatement.
--Larry Hausman, vice president of Policyholder Services and Conversion, Nov. 15, 2005
Over the past three years, two members of my family in their 90s were in an assisted living facility and required round-the-clock care.
The $12,000 monthly costs were chewing up their life savings the way voles and moles tunneling underground will destroy a garden.
This situation so scared my wife, Peggy, and I that when we received an offer for long-term care insurance, we made an appointment with the agent.
She came. She sold. We bought.
A subsequent mailing from the insurance company--Penn Treaty--was so terminally disgusting that we canceled.
Like the voles and moles chewing up my elderly family members' life savings, equivalent voles and moles may be deep inside your organization eating into your revenues and profits.
About Long-term Care Insurance
Long-term care is the elephant in the living room--a pernicious black hole in everyone's retirement plans. What is long-term care? Think Ronald Reagan. Think Christopher Reeve. Both once were robustly healthy men who, at the end of their lives, needed "custodial care." They became unable to perform basic tasks of feeding, dressing, toileting or bathing themselves.
The Unique Selling Proposition (USP) for this kind of niche insurance is that so-called custodial care is almost never covered anywhere--not by standard health care or disability policies, and not by Medicare.
If family members are unable to devote themselves to these functions for an incapacitated relative, two choices exist: A caregiver comes to the home or the patient goes into an assisted living facility.
In either case, the cost is borne by the patient or the patient's family.
Only after the patient has spent down his or her entire life savings to the point where virtually nothing is left will Medicaid take over. The patient is transferred to a public facility, becomes a ward of the state and will receive the barest minimum of care.
Given the current cutting of Medicaid services, this care will be very minimal.
Every year, approximately a half-million American families are financially ruined because they were forced to spend their life savings on long-term care.
The insurance agent by the name of Heidi told us all of the above. We opted for Independence Blue Cross to cover care in an assisted living facility and Penn Treaty to cover home care. Total cost per year: $5,786.12.
Several months ago, Penn Treaty jacked up the annual premiums for our home health care policies by $1,227.48. We decided to talk about it before sending in the check. We dithered.
We called Heidi, who told us that we could save a lot of money if we opted for two years of home health care rather than an open-ended policy.
Whereupon we received two mailings: (1) Penn Treaty canceled the policies for nonpayment and (2) notice of class action litigation vs. Penn Treaty for selling policies at artificially low prices with the intention of raising prices later on. As I understand it, this sounded like a kind of bait-and-switch deal.
Peggy, who is paying into a corporate disability policy, decided to let her Penn Treaty home care plan lapse. We decided to sign me up for two years of home care rather than unlimited. We sent a check for one month at the old rate with the overdue premium notice, requested the two-year coverage and asked to be billed at the lower rate.
Penn Treaty's reply was the tackiest, sleaziest mailing I have ever received from a public company in 40 years of studying direct mail.
How Not to Keep a Customer
The mailing arrived stuffed into an envelope with two glassine windows. The letter was on classy stationery and personalized. But it was stuck to the flap glue, so when I tried to extract it from the envelope, it ripped.
The torn letter failed to address my request for two-year coverage instead of unlimited coverage. Rather it was a form letter saying that my original check was being returned (which it was) along with an application for approval to have the original policy reinstated.
The four-page application was this foul, muddy thing that was disgusting to look at, impossible to read and printed on a slant by a cheap photocopy machine. It made me feel dirty.
Quite frankly, it was the kind of a mailing you might expect to receive from the business office of a publicly funded nursing home supported by Medicaid, where catatonic residents in filthy bedclothes are sitting around in rusty wheel chairs amidst the reeking odor of bodily wastes.
The torn letter asked me to fill out this cruddy application and return it with my check for $586.26--the amount I would have to pay for the original policy, not the new two-year policy, which I requested and presumably costs less.
My immediate reaction was that if this was the best Penn Treaty could do on the front end for a customer who had already paid thousands of dollars, what kind of service would I receive at the back end--if I became ill and needed home care?
I was revolted.
Needless to say, I did not fill out the application and send in my $586.26.
Rather I kept this appalling effort for my files as a prime example of how not to treat a customer.
Takeaway Points to Consider
- When was the last time that you conducted a full review of all your outgoing correspondence--mail, phone and online--to your customers, prospects, inquirers, suppliers and stockholders?
- I once was hired to consult with a specialized book club in the Midwest. In preparation for the trip out there, I asked that they assemble the printed material that was sent to the members. In particular, I wanted to see the very first shipment of books and welcome literature. When I arrived at the meeting, I was told that this shipment had been assembled with great difficulty and that nobody on the marketing side had ever seen it before--not the vice president of book clubs, not the club director, not the marketing manager.
We opened the package just the way a new member would and I found a series of gaffes that could negate much of the good will generated by the acquisition mailing. Over the years, the voles and moles in the shipping department were told to put in this piece or that piece, but nobody took the time to show them how it should be folded, what sequence of material the new member should see, etc. The result was an olio that was more confusing than welcoming.
- Do you--and does every member of your organization--know what letters and other material are going out over your signatures? When was the last time you looked?
- When Ernest Hemingway finished a novel, he would stick it in a desk drawer in his Cuban finca and go off to hunt game in Africa, deep-sea fish off Bimini or follow a hot new bullfighter around Spain for a couple of months. When he returned to Cuba, he would read the novel with fresh eyes, immediately see what needed rewriting and then would send off a hard diamond of masterful prose to Maxwell Perkins, the great editor at Charles Scribner's Sons.
I would recommend that a complete review of all outgoing material be undertaken every three or four months. Put yourself inside the head of the recipient and read it as though you were seeing it for the first time. My bet is that you may be appalled at what is going out over your signature.
Web Site Related to Today's Edition
American Association for Long-Term Care Insurance