As I mentioned in my Blog last week, I wanted to present a case study that shows the premium paid into a benefit plan is just one aspect in deciding what Insurance Company to work with. I will not use the Insurance Companies names, since this has nothing to do with one Insurance Company being better then the other. It has to do with the flexibility and the needs of the client.
I took a client of mine out to market and there were two Insurance Companies that came in with pricing and options that were of interest.
Insurance Company A came in with a price reduction of $900 per month. This was substantial, the client pays about $5,000 per month in premium. The Target Loss Ratio (TLR or Administration Costs) were the same as their existing Insurance Company. There were savings in the pooled benefits (Life, AD&D, Dependent Life and Long Term Disability (LTD)) as well as the Extended Health and Dental. Seemed like a slam dunk.
Insurance Company B came in with a $300 per month price reduction. Same TLRs as their current carrier and minimal savings in the Pooled Benefits.
So why did the client choose Insurance Company B???
A couple years ago they reduced the paramedical (Chiro, Massage, Physio, etc) to a combined $500 per year maximum per insured. Reducing or taking away benefits are never a fun thing to do. This year they are excited to increase the paramedical practitioners to a combined $1,000 per insured.
Company A wanted to increase the paramedical practitioners to $500 per practitioner per insured. We had already demonstrated this model was not sustainable. That would mean that the client would give the benefits to the employees this year and possibly have to take them away at renewal next year, or suck up the increase they would receive.
Due to the industry the employees work in, it was important for the client to provide coverage for a particular practitioner. Company A was unable to do this.
Company B was able to accommodate all of the requests and offer the employees an enhanced Long Term Disability (LTD) benefit plan at a reduced price.
With Company B, their ability to accommodate the plan design sounded like a more sustainable option.
Both Insurance Company A & B are good companies and I work with them both. This was an example of when understanding the wordings in the contract and the long term ramifications of what you are implementing were important.
Contact Glendinning Insurance Services, your Resource Specialist.