Cigna 2012 Annual Report Download - page 31

PART I
ITEM 1 Business
Cigna’s principal competitors in its U.S.-based business are: health. This is accomplished primarily through financial incentives,
access to enhanced medical quality data and other information
other large insurance companies that provide group health and life sharing. The effective use of the Company’s health advocacy, customer
insurance products; insight and physician engagement capabilities, along with decision
Blue Cross and Blue Shield organizations; support tools (some of which are web-based) and enabling technology
are critical to success in the health care industry, and Cigna believes its
stand-alone HMOs and PPOs;
capabilities in these areas will be competitive differentiators.
HMOs affiliated with major insurance companies and hospitals;
On February 15, 2013, CMS issued its Advance Notice of
and
Methodological Changes for Calendar Year (CY) 2014 for Medicare
national managed pharmacy, behavioral health and utilization Advantage (MA) Capitation Rates, Part C and Part D Payment
review services companies. Policies (the ‘‘Notice’’). CMS is accepting comments on the Notice,
The primary competitors of the international health care business and final terms are expected to be published on April 1, 2013. While
include U.S.-based and European health insurance companies with management believes that a significant number of comments from
global health benefits operations. For the Company’s international interested parties (including Cigna) will be provided to CMS, there
health care operations in the United Kingdom and Spain, the primary can be no assurance that CMS will amend its current position. Given
competitors are regional and local insurers. the uncertainty regarding the final terms of the Notice, the Company
cannot estimate the impact that it will have on its business, revenues
Competition also arises from smaller regional or specialty companies
or results of operations but recognizes that any impacts could be
with strength in a particular geographic area or product line,
materially adverse. Accordingly, the Company is currently evaluating
administrative service firms and, indirectly, self-insurers. In addition
the potential implications of the Notice, including adjustments that
to these traditional competitors, a new group of competitors is
the Company may make to the programs and services it offers to offset
emerging. These new competitors are focused on delivering employee
any adverse impacts.
benefits and services through Internet-enabled technology that allows
consumers to take a more active role in the management of their
Group Disability and Life
Cigna’s Group Disability and Life segment provides the following return to work rate. Examples of the benefits of this integrated
insurance products and their related services: group long-term and approach (for which Cigna may receive fees) include:
short-term disability insurance, group life insurance and accident and using information from the health care and disability databases to
specialty insurance. These products and services are provided by help identify, treat and manage disabilities before they become
subsidiaries of Cigna Corporation. Cigna markets products in all 50 chronic, longer in duration and more costly; and
states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands proactive outreach from Cigna Behavioral Health to assist
and Canada. employees suffering from a mental health condition, either as a
primary condition or as a result of another condition.
Principal Products and Services
As measured by 2012 premiums and fees, disability constituted
Disability
approximately 45% of this segment’s business. Approximately 12,300
insured disability policies covering approximately 6.5 million lives
Long-term and short-term disability insurance products and services were outstanding as of December 31, 2012.
generally provide a fixed level of income to replace a portion of wages
lost because of disability. Cigna also provides assistance to employees
in returning to work and assistance to their employers in managing
Life Insurance
the cost of employee disability. Group disability coverage is typically Life insurance products offered by Group Disability and Life include
employer-paid or a combination of employer and employee-paid, but group term life and group universal life. Group term life insurance
may also include coverage paid for entirely by employees. may be employer-paid basic life insurance, employee-paid
Cigna is an industry leader in returning employees to work quickly, supplemental life insurance or a combination thereof.
resulting in higher productivity and lower cost for employers and a Group universal life insurance is a voluntary life insurance product in
better quality of life for their employees. Cigna’s disability insurance which the owner may accumulate cash value. The cash value earns
products may be integrated with other disability benefit programs, interest at rates declared from time to time, subject to a minimum
behavioral programs, medical programs, social security advocacy, and guaranteed contracted rate, and may be borrowed, withdrawn, or,
leave of absence administration. Cigna believes this integration within certain limits, used to fund future life insurance coverage.
provides customers with increased efficiency and effectiveness in
disability claims management, enhances productivity and reduces As measured by 2012 premiums and fees, group life insurance
overall costs to employers. Coordinating the administration of the constituted approximately 46% of this segment’s business.
segment’s disability programs with medical programs offered by Cigna Approximately 6,200 group life insurance policies covering
HealthCare provides enhanced opportunities to influence outcomes, approximately 5.6 million lives were outstanding as of December 31,
reduce the cost of both medical and disability events and improve the 2012.
CIGNA CORPORATION - 2012 Form 10-K 9
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