Traditional Insurance 

Traditional insurance is a costly way to provide group benefits to employees

 
Problems with Traditional Group Insurance Programs
 
  • Rates charged are inflated by a reserve factor
Incurred claims (claims paid plus reserve) are used when calculating your renewal rates instead of actual claims paid.  Reserves are a buffer that insurers price into your plan to protect them from the possibility of termination of coverage.
  •  Rates charged are inflated by a trend factor assumption
A trend/inflation factor assumption is priced into your plan to presumably cover the potential increase in claims as a result of government cut backs, increase in the cost of prescription drugs, etc.  This is an ambiguous and non-factual tool that insurers use to inflate rates to provide them with a cushion or buffer.
  •  Administration fees charged are inflated
Administrative charges are expressed as percentage of premium and not as a percentage of actual claims paid.  They are also inflated with a risk charge and a profit charge.
  •  You are limited to holding your employee data with your current insurance provider
Every time you want to change carriers you have to go through a complete re-enrolment of your employees.  You have no control over your on-going employee data information.   This takes time and money.
 
 
These factors create a vicious and unproductive cycle.  You are forced to change carriers every 3 or 4 years because rates increase every year, based on factors that often are unrelated to your company’s claims experience.  When conducting a market survey you are bound to find a lower priced carrier and thus you are forced to change carriers.  It creates a vicious and unproductive cycle, which is burdened with lots of administration.
 
Consider moving your group benefits to a risk protected, self-funded strategy.  We can show you how to save money on your benefits and help you develop a long-term benefits strategy designed to help your employees.