WellPoint pushes sales force to market life, dental, vision

WellPoint Inc. touts as the company’s biggest strength its dominant market share in its health insurance markets.

But now the officers of the company are working to branch out beyond health insurance. They’re training
their sales force on how to better sell dental, vision and even life and disability insurance–which
WellPoint refers to as its specialty group of products.

Indianapolis-based WellPoint already sells these products, but to relatively small numbers of
customers. Whereas WellPoint claims 35 million health insurance customers, it has only 5.5 million customers
with life and disability policies and even fewer who have bought WellPoint’s dental or vision policies.

So in April, WellPoint launched a six-week,
computer-based training course for its 1,100 salespeople nationwide. Nearly all will have completed the
course by year’s end.

Armed with more knowledge about specialty products, the sales personnel will turn to the benefits brokers whose employer clients
already buy WellPoint health insurance. They’ll try to get those employers to add WellPoint’s specialty insurance products.

WellPoint needs to find new avenues of growth.
Its profit this year has been held in check by rising health care costs and by more employers hiring
WellPoint only to administer health benefits, rather than buying WellPoint’s full-fledged insurance products.

"In January ’08, as we looked at our strategic
opportunities for growth going forward, clearly, the specialty business offered one of the best opportunities,"
said Dennis Casey, WellPoint’s senior vice president of specialty products.

WellPoint’s strategy is savvy, said Les Funtleyder, a health care analyst at Miller Tabak &
Co. in New York.

"When
other businesses are showing lackluster growth, it makes sense that you look for other places, especially if you already
have the sales force," he said, adding, "In terms of revenue growth, you should grow where you aren’t."

Catching up

The trouble for WellPoint is that some health insurers
already have robust specialty products segments. For example, Minnesota-based UnitedHealth Group provides
vision insurance to 13.6 million Americans and dental insurance to another 6 million.

On Sept. 9, UnitedHealth subsidiary Golden Rule Insurance Co., based in Indianapolis, announced
new dental insurance it’s offering to individuals in 20 states. It plans to launch vision insurance in
the first quarter of 2009.

"Our customers want the product," said Rich Collins, the CEO of Golden Rule, citing the company’s market research.
"We want to deepen our relationship with customers. We want them to think about us when they need
all sorts of personal insurance."

But WellPoint has made moves of its own. In April, it agreed to acquire DeCare Dental. The Minneapolis-based
company has 4 million customers, which will boost WellPoint’s total dental customers to 9 million when
the sale closes in the fourth quarter. That will make WellPoint the largest dental benefits provider
in the country.

"DeCare’s
unique tools and services can improve our future revenue growth and create more opportunities to improve the health
of our members, as there is a linkage between oral health and medical conditions," WellPoint CEO Angela Braly said during
a July 23 conference call with analysts. She added, "We expect continued enhancements to our specialty products portfolio."

WellPoint announced the DeCare acquisition six
weeks after it dialed back its 2008 profit forecast because medical costs were rising much more than
expected. Through June 30, WellPoint spent 84.2 percent of its premiums on medical care, up from 82.5
percent during the same period last year.

Fatter profit margins

Specialty products are attractive to insurers because they generate higher profit margins. WellPoint’s Indiana subsidiary,
Anthem Blue Cross and Blue Shield, spent 77 percent of its commercial health insurance premiums on paying claims in 2007,
according to records filed at the Indiana Department of Insurance.

But that 23-percent profit margin was easily surpassed by Anthem’s dental and vision insurance,
which generated a 33-percent margin last year, according to Insurance Department records.

However, WellPoint’s Casey noted that vision
and dental don’t generate nearly as much in total dollars as health insurance. Anthem’s Indiana health
business pulled in $258 per customer per month last year, compared with $23 per customer per month for
dental and $2 per customer per month for vision.

Casey, 56, was tapped to lead the specialty-products push because of his record of growing customer
rolls at WellPoint’s Indiana subsidiary, Anthem Blue Cross and Blue Shield, which he led from 2000 to
2007. Also, Casey sold life and disability insurance early in his career for American Bankers Life.

Anthem Inc., WellPoint’s predecessor, used to
work more in life insurance than it does now. It first acquired a life insurance company in 1979, Casey
said. It stepped up its diversification efforts in the 1980s, including the purchase of $100 million
in life insurance business in an acquisition of Dallas-based American General Insurance Co.

But in the 1990s, Blue Cross and Blue Shield shed many of those businesses, instead focusing on
a strategy of buying up other states’ Blue Cross and Blue Shield plans. That effort created WellPoint,
which now operates so-called Blues plans in 14 states.

WellPoint now has more customers than any other health insurance company. The company estimates
its market share at 25 percent or more in 10 states, including Indiana.

Building on relationships

Casey said those numerous relationships give WellPoint a head start on selling more specialty
products.

"That’s
a really very solid platform for us to build on. It’s still a relationship business. It’s easier to sell additional
product lines in that relationship than it is to start a new one," he said. "Of course," he added quickly,
"we’re looking to start as many new ones as we can."

John Gause, president of Apex Benefits Group Inc., a benefits brokerage in Indianapolis, said
WellPoint’s specialty push could be attractive to brokers and their employer clients.

But, he added, brokers also have relationships
with more traditional vision and dental insurers–such as Principal Financial Group or The Guardian Life
Insurance Company of America. Disrupting those relationships will be WellPoint’s challenge, he said.

"They’re going to have to work a little
bit harder to get the brokers to think of them first for those other lines of coverage," Gause said.

WellPoint does and will continue to offer discounts
to employers and individuals who buy a package of health and specialty products from WellPoint, Casey
said.

He also wants WellPoint
to be able to join together its administration of specialty and health products, so it could offer one
bill and one point of contact for claims and customer service. But the company still has to work to tie together the four
centers that administer WellPoint specialty products. They are strung out from Atlanta to Columbus, Ohio, to Colorado Springs,
Colo., to Camarillo, Calif.

As it promotes its specialty products more, WellPoint also is working to offer even more claims data for employers to use
to shape efforts to improve their workers’ health. For example, chronic diseases such as diabetes or heart disease can manifest
themselves most obviously as a problem in the eyes or mouth.

Casey said WellPoint hopes to launch a "Total Body" insurance product, which would include
health, vision and dental coverage, by 2010.

"There’s clearly a relationship between dental health and eye health and overall health,"
Casey said. "We’re in a position to aggregate that data."