Conseco Senior Health Insurance: A Strategic Problem of Reputation and Regulation Harvard Case Solution & Analysis

In year 2007, Conseco’s CEO, C. James Prieur, confronted several problems with his company’s long term care (LTC) insurance based subsidiary company, Conseco Senior Health Insurance (CSHI). CSHI faced the threat emanating from congressional hearing and audit by U.S Government accountability office, instigated by New York Times Article alleging that CSHI had unprecedented number of customer grievances.

This threat came in addition to more comprehensive systemic difficulties, for example, fact that the whole LTC industry was barely profitable. To whom the industry was exceptionally beholden for acceptances of rate increases to keep it afloat, what small profitability existed was dependent on the goodwill of state insurance regulators.

Furthermore, CSHI had unique tactical challenges that could not be blown off: First, the cost of managing the uniquely heterogeneous group of policies of CSHI put it at a disadvantage relative to the remainder of the business and made rate increases notably needed. Second, state regulators were negatively predisposed toward Conseco because of its infamous reputation and hence were generally reluctant to grant rate increases. Eventually, CSHI was dependent on capital infusions totaling more than $1 billion from its parent company, Conseco, for which Conseco had received no dividends in return. Faced with pressure from Conseco investors as well as the looming congressional investigations, what should Prieur do? Pupils will discuss the available alternatives in the context of a long-term relationship between Conseco and state insurance regulators. Prieur's remedy to this difficulty proved to be innovative for the sector and to have far reaching consequences for CSHI's corporate arrangement.

PUBLICATION DATE: January 07, 2015 PRODUCT #: KEL898-HCB-ENG

This is just an excerpt. This case is about GLOBAL BUSINESS

Share This

SALE SALE

Save Up To

30%

IN ONLINE CASE STUDY

FOR FREE CASES AND PROJECTS INCLUDING EXCITING DEALS PLEASE REGISTER YOURSELF !!

Register now and save up to 30%.