It’s the renewal meeting and the client has received a 16.7% increase to the premium overall.
· Short Term Disability claims have been used to 193% of premium
· Extended Health Care, primarily prescription drugs claims are 93.6% of premium
· Dental Care claims are sitting at 103.2% of premium paid.
· There are three open Long Term Disability claims.
Despite the open Long Term Disability claims, that premium has reduced on that benefit line, as well as the Life Insurance, Accidental Death & Dismemberment, and Dependent Life insurance. The benefit lines to increase are those being utilized more than the premium can support.
In fourteen years, all with the same insurance underwriter, the renewal premiums have:
· Decreased seven years
· Remained unchanged twice
· Increased five times, which until this renewal, the maximum increase was 4.46%
Client: “What happens if we move carriers?”
Benefit Consultant: “You’ll save money…at least until the rate guarantee runs out.”
Client: “Then what?”
Benefit Consultant: “Exactly. Then what?”
Shatter the myth
Every insurance carrier wants your business. That’s why they’re in business. But not every insurance company wants to retain your business, especially when the plan is being used more than is sustainable through premiums.
That’s not to say moving carriers is not an option for consideration, but it’s not the only option. Moving insurance providers doesn’t change employee’s claiming needs. Unless the plan design changes as well, it is not going to reduce the claims, especially when the trend is upward. Moving carriers simply removes the risk of covering the claims from one provider to another and once the new provider has to cover those claims, they will need to increase the rates as well.
“Well, we’ll just move to another carrier then and keep moving carriers to avoid the increases.”
True, you can do that…for a while…until you become uninsurable as a company that no insurance underwriter is willing to take on due to the risk.
In the process of always moving providers, you have probably cost yourself more money, not just in premium, but in lost benefits, lost reserve funding, added hidden fees, administration, new technology, employee trust and engagement and more importantly retention.
Costs and impacts of moving benefit providers:
· Apples to apples coverage is seldom achieved. There are always contract modifications and changes between insurance and benefit providers.
· Time and effort to complete new paperwork and banking.
· New technology and systems to learn. How one provider processes information is very different from one another and there’s no “well, so and so used to do it this way and I would like the new provider to do it that was as well.” Great technology comes with a cost that you may have just left behind.
· Communicating the different coverage to staff members and how this will impact their bottom line. In fact, in some cases, the specific procedure or medication may not be covered at all but only covered under different criteria than the previous provider.
· Lack of consistent coverage may impact employee’s pocketbook, and the additional cost may encourage them to seek employment with a better benefit plan elsewhere.
· Lack of consistent coverage may impact an employee’s productivity and their ability to do the job as effectively.
Alter perceptions
· How is the benefit plan an investment into staff?
· Does it retain and promote healthy employees?
· Does it align with the corporate expectations on productivity?
· Is it doing what it was intended to do?
As was the case in this example. Once we come to terms with how the benefit plan HELPS employees perform better, we can alter the conversation from the 16.7% expense to the gain on investment into staff members, the plan can then show the return on that investment through engagement, workflow, and retention.
This is where we drive innovation in benefits. Let’s have a conversation. Give us a call.
Note: this was written without the aid of Artificial Intelligence (AI)
Disclaimer: Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. The site is read by a world-wide audience and employment, taxation, legal vary accordingly. Please seek legal, accounting and human resources counsel from qualified professionals to make certain your legal/accounting/compliance interpretation and decisions are correct for your location. This information is for guidance, ideas, and assistance.
