Group Insurance Unraveled


Renewal Time Blues…… here comes the increase in premiums again!

If you already have a group benefit insurance plan in force you will receive a plan renewal proposal from your insurance brokerage several months prior to the renewal. This is the time to act!

If your plan is being compromised by a few “high claimers”, resulting in high renewal premiums, then this is the time to act. You are not obliged to accept these premium increases without a fight. Let us go to battle for your company. We know how to win this fight!

Finding the right solution will save your company money…..!

Your broker should consider all five group insurance models in an effort to determine the most cost effective and functional plan for your company and of course the one that best meets your company objectives. Most brokers will rarely promote all four alternatives, either because they are unable to administer one or more of the plans or they have developed an expertise in one model and that is what they basically advocate to all their potential customers

 What are the five group plan models that must be evaluated?

  1. Conventional fully insured group insurance benefits.
  2. ASO –Administrative Services Only group benefit plans
  3. Fully Insured, and pooled with the brokerages own book of business, group insurance plans, to spread the risk and mitigate future premium increases.
  4. Health Spending Accounts with pooled benefits only.
  5. Fully insured or ASO, with product aggregation optimization.

Plan Models

  • Conventional fully insured group insurance benefits. – If you search benefit plans using Google or Yahoo, most websites will generally utilize their web space to explain this model in tremendous detail. Why? The fully insured plan is what most Human Resource departments or CFO’s are used to working with. The biggest concern I have with fully insured group plans is that you are usually setting yourself up for a significant premium increase every year unless your plan is underutilized, which most are not , or the plan design is so frugal that being a member of the plan provides minimal cost- benefit to the employee due to the plan caps on drugs, dental and paramedical.
  • Fully Insured and pooled within the brokerages own book of business, group benefit plans to spread the risk and mitigate future premium increases. This model will usually produce better results than the conventional fully insured plan depending on the brokerage offering the plan. The numbers of lives the brokerage insures, employee demographics, nature of the business will all need to be considered before making this model your first choice. The key here is that the insurance carrier looks at the brokerages book of business as one company and therefore will negotiate insurance rates and stop losses according to the number of lives within this block. The brokerage has the flexibility to distribute any premium increases from the carrier according to its own goals and objectives. Thus one company within the block may receive a 2% premium increase at time of renewal while another company in the block could receive a 5% increase. This flexibility can be very useful particularly when bringing on new groups who lack prior claims experience.
  • ASO Administrative Services Only group benefit plans  – This could be an excellent alternative especially for companies that have employees that are consistently high claimers and thus push overall company paid claims over the budgeted premium reserves that are being held to pay claims. These plans work if you are able to purchase a low stop loss and the stop loss is pooled hopefully with at least another 50,000 lives on the brokerage’s book of business. Size of the company could be an issue here and also the demographics of the employees. The brokerage should also have the ability to aggregate different insurance products and be able to manage the aggregation in terms of producing one bill for the client. Most brokerages cannot or will not do this. This model was traditionally offered only to large corporations, (over 100 lives). Today with third party administrators on the scene, smaller life groups, of between 20 and 100 lives, are now good candidates for this model. The ASO model should always be investigated and a brokerage, with third party administration capabilities like Group Insurance Toronto, should be found that can provide this solution.
  • Health Spending Accounts with pooled benefits only – Many employers are reluctant to commit to the cost of managing and paying for a full blown group insurance plan. They do recognize an obligation to assist their employees in times of poor health or in the case of a catastrophic event. What this model offers is life insurance, Accidental Death or Dismemberment, critical illness, travel insurance and maybe long term disability. (optional). Instead of providing a health care benefit such as a drug plan, and a dental plan, they offer a Health Spending Account to each employee that the employer may or may not contribute to. The employee is free to spend the health spending account allocation (an allocation might be $1,000 per year per employee), in any way he or she wishes. If the allocation is not fully spent it accumulates for future medical expenses in a future year. A health spending account allows medical expenses to be incurred on a before tax basis to the employee. This model is very cost effective and works amazingly for smaller companies. The employer will always know his real cost under this model and this cost cannot change unless the employer changes the amount that can be contributed to the health spending account yearly. (see Health Spending Accounts under the Personal top-up insurance tab).

         * Fully insured or ASO, with product aggregation optimization – Often one insurance company is       not competitive on with all its financial products. The opportunity to “mix & match” insurance products is possible. Usually only TPA’s (third party administrators can offer this option).  So for example, your life insurance carrier could be Great West Life. Your AD&D carrier could be Royal and your LTD carrier might be SSQ for example. If you have an ASO plan your stop loss carrier could be yet another carrier. Even though there are multiple insurance companies involved,  the TPA will centralize the complete billing process and thus the company still only deals with one bill at the end of the month. At the end of the day, this type of plan can save the company significant dollars and therefore is always worth investigation   

Why is Group Insurance Toronto a good choice for companies that want to offer group Insurance benefits to their employees in Ontario and other provinces in Canada? GIT offers all five group benefit models. Best of all we even let you switch between models, if after one of our quarterly monthly reviews we believe that there could be greater savings by switching to another model. There is no need to wait until the end of the contract term to switch. The change in plans is seamless and easy since we already have all the employee enrolment data and prior claims experience.


Employee Benefits