Deft Research’s National Senior Loyalty Study was conducted on-line in September, 2009. 3,492 seniors (aged 65 or more) responded to our survey. The results were released on November 12th. 2009 is the fourth year of the study and interesting views of industry trends are available.
This EXECUTIVE RESEARCH BRIEF focuses on Humana’s path to the present. In the graph below, we present four years of Humana’s MAPD Loyalty Index and Switch Intention data.

HUMANA MAPD LOYALTY AND SWITCH TREND

SOURCE: DEFT RESEARCH, 2009

The graph shows that the loyalty of Humana’s customers has varied inversely with the switch intention percent.

In 2009 both Loyalty Index and Switch Intention indicators for Humana are above the industry averages. This is a paradox, their customers are more loyal than average but also have a higher likelihood of switching. The National Senior Loyalty Study 2009 suggests that Humana has attracted active consumers. These are consumers who, despite loyalty, remain shoppers and continue to look for health insurance that suits them even better.
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Generating Loyalty

The loyalty study identified six top attributes for generating loyalty. If, either through experience or promotion, customers come to believe that their insurer is better than competition regarding these attributes, they are likely to be loyal customers and less likely to switch. Below, the six attributes and Humana compared to the overall MAPD industry.

HUMANA AND SIX TOP ATTRIBUTES FOR GENERATING LOYALTY

SOURCE: DEFT RESEARCH, 2009

Humana’s % Better Scores are considerably higher than average for understanding the needs of seniors and having honest sales people. But customers are less likely to view Humana as better than competition at offering lower copayments, easy paperwork, or early detection programs.

The National Senior Loyalty Study’s Humana profile does show one unique theme pointing to the development of customer loyalty. Humana’s % Better Scores are much higher than average when customers assess the company’s communications with them and the information provided to help them save money on drugs.

Helping seniors watch their money is part of Humana’s brand image and attractiveness to active shoppers. But is it enough to keep customers loyal?

Did you know that over the past year, the percent of seniors with some intention to switch health insurers increased from 21% to 27%? Knowing this alerts you to potential customer retention issues, and raises concerns over “what should be done?” The National Senior Loyalty Study 2009 gives you a relevant and necessary picture of customer loyalty and switch intention that will help you make informed decisions about retaining your own and attracting your competitors customers.

What is the National Senior Loyalty Study? The National Senior Loyalty Study is the largest study of its kind to track and measure senior customer loyalty, switch intention and market differentiation among health insurers.

Not only does the 2009 National Senior Loyalty Study equip and arm you with the best model for controlling disenrollment and increasing customer loyalty, it also gives you a better idea of how your competitors are doing.

You can phone, fax or e-mail us to get the full report, due to come out by early November.

The National Senior Loyalty Study reports an increase in our Senior Loyalty Index coinciding with a paradoxical increase in the percent of consumers with some intention to switch health plans in the coming months. In other words, senior consumers are as happy with their health insurance as ever, but that loyalty is not keeping people from staying on the lookout for something new.

Why? When our analysis is finished, we will show which of 53 market differentiators are associated with loyalty and switch intention. Separate analyses will be performed for MAPD, Medsupp, and PDP.

The analysis will also show how different competitors are generating loyalty among their customers.

We will have perspectives from hundreds of MAPD and Medsupp consumers indicating how top competitors are generating loyalty or how they are failing at it.

Based on retirement expectations, current income and sources of retirement income, Deft Research developed four market segments for it’s Age-in Study.

• On the Fence

• Working Secure

• Working with Less

• Retiring Well

IMPLICATIONS.

Although people are eligible for Medicare at age 65, this date is no longer significant for the majority’s approach to retirement from work. The result is a prospective market of Medicare age-ins where only one half will actually be in the market for individually purchased MA or Medigap plans.

Because of the variety of retirement approaches, age-ins can be divided into market segments whose health insurance needs also vary.

• On the Fence and Retiring Well are far more likely to need individually purchased health insurance. Which means that targeting them with specific and more intense marketing will result in a higher ROI for that marketing activity.

• Working Secure and Working with Less will continue to work and to rely more on employer-based insurance. These markets may need supplemental coverage or basic lean MA benefits to assure complete coverage.

Results from Deft’s new Senior Market Dynamics Study show a dramatic decline in the percentage of seniors shopping and considering new health insurance.

Switching remained about the same however, as those who did shop were more serious about finding a new plan. Signaling a slowdown in the migration from Medsupp to Medicare Advantage, the rate of switching declined more among the Medsupp population than the Medicare Advantage population.

The study offers conclusions about:

• the impact of pricing and other benefit attributes on switching,
• the inactive segment of the market and what inhibits them,
• the changes in consumer perception of their health insurance over time,
• the impact of ancillary services on future consumer consideration,
• the best ways to reach consumers through a variety of promotional channels.

With this information your Medicare program will be helped because it will help you better predict the reaction of the market to product and marketing strategies.

Additional study sections address the following:

• Whether the group retiree market is thawing or not.
• How dual eligibles want to be reached.
• The story of consumers with original Medicare only and a PDP.

Deft Research’s Senior Market Dynamics Study is part of the Senior Market Intelligence Service a unique 3-part research program of the senior health consumer. The service includes three senior consumer research studies, 12 Executive Research Briefs, teleconference presentations, and on-going support.