Credit Suisse https://www.credit-suisse.com hosted Select Quote’s https://selectquote.com CEO, Tim Danker and the CFO Raff Sadun for a virtual NDR. Select Quote (SLQT) sees a massive opportunity across all three segments, and believes the company is well positioned to take advantage of that opportunity given the company’s technology stack and agent force.
In the senior business, SLQT defines the total addressable market as the total number of Medicare eligible, which is approximately 62 million seniors. Around 60% or 38 million seniors are in a Medicare Advantage (MA) or MedSupp plan.
Based on the current market size of 62 million Medicare eligible, SLQT puts its Senior business market share just below 0.7%. The combined market share for the four major players in the market is still <4%, implying that it is a long way to go before they start bumping into each other’s market share.
Even if SLQT quadruples its membership over the next five years, SLQT’s market share will still be <2.5%. Along with the company’s FY20 earnings release in mid-September, SLQT plans to provide FY21 & Long Term Outlook on revenue and margins.
It was discussed that SLQT’s higher persistency is a result of their better technology combined with their highly skilled agents. One of the areas SLQT has been focused on is making sure that customers are in the right plan to begin with as well as deploying their customer care team to follow up with the policy holder.
The company has been supporting fully remote agents for 35 years so the transition to all remote agents is relatively easy for the company. The company traditionally manages agents out of six geographic locations. The pandemic and the remote working capabilities have opened up the hiring pool which enables SLQT to get the best talent country-wide.
COVID is a modest headwind to SLQT’s Life segment as the vast majority of the term life business is still medically underwritten which requires medical professionals to do “in person” visits and perform medical tests.
To recapture members who are looking to change plans, the company focuses on leveraging the data and real time feeds from carrier partners. Overall, the company sees their first year persistency at ~65% on an approved member basis (low 70% on a paying member basis). For renewal years 2 through 10, SLQT’s average persistence on an approved member basis is about 89% and is sloping upward.
As a result of COVID, SLQT has also seen increased consumer demand for the company’s services as well as some favorability around marketing costs in some of the channels. While management is unable to provide much color on the SEP until their first earnings release, SLQT did note that it is fair to categorize the SEP as being a net positive for the company and all the DTC tele-sales players.
As for the importance in having an e-commerce platform, management notes that the intersection of digital and a human advisor at the other end of the phone is what produces the best customer outcome. Management also notes that putting together an e-commerce platform has never been a technical hurdle.
The company is planning to test their e-Commerce Platform, however, SLQT notes that it already has the capability to do online customer fulfillment and enrollment, however, the company will be testing and learning the environment over the course of the late summer to early fall.
For more information and to provide feedback, email Jailendra Singh at jailendra.singh@credit-suisse.com or call 212-325-8121