MYTH vs. REALITY and COMMON MISTRUTHS

Here are some common misperceptions in employee benefits:

Myth:  Benefits are a 'bid.' 

Unlike P&C, benefit proposals are not a competitive bid.  Rates are based on things like demographics, claims experience, years with the same carrier, existing health conditions, and number of locations.

Changing carriers every year will ultimately put you in a corner where no carrier will even provide a quote.  Their concern is that the group is not committed to a long-term relationship with a given carrier.  Because carriers lose money on a first year case, they want the long-term relationship.  The upfront expense in installing a new group is only recovered in future years on the books.  

If you burn a market, you lose your desirability and will not get the most competitive rates.

When there is more than one broker involved in a renewal process, you lose.

Carriers do not take repeated solicitations seriously because they know it is a rate shopping exercise; it makes you look bad, and it makes your broker look bad.  You lose credibility.

The goal is to make your program coveted by the carriers, so that, when you need the best rates and options, the carrier market takes the request seriously.

Myth:  Some Brokers Get a Better Deal

Not true.  You will hear that certain brokers have a "preferred" status with carriers and that they get better rates than other brokers.  Nope.  Ask our consultants who came out of the carrier market.

Ask the carriers!

Myth:  Putting Your Benefits with Your Property & Casualty Firm will Get You Better Rates

Hmmm. Different carriers, completely different programs.  Why would your medical carrier care about what you are doing with your property & casualty insurance?

Here's Our All Time Favorite "Money Saving" Myth:

Broker calls client saying, "We can save you money on your plans."  Better yet, the broker puts a number to it.

How can any broker say that without having intimate knowledge of your benefit spend, your plan design, your participation, and the contribution strategy?

Does that even make sense?!

And Here's Another "Money Saving" Favorite:

"We can save you money by self-funding."

There are very specific criteria that must be met before considering some form of alternate funding. 

If these criteria aren't met, self-funding can cost you more--a LOT more.  It also takes expertise to install, manage, track, and report any funding to make sure that it is performing as projected.

Here are some other "come hither" hooks:

  • Gap Plans
  • Captives
  • PEO or Leasing Arrangements
  • Associations
  • “Bundled Administration"

Conclusion

New, unproven, untested and unvetted programs can be very risky. Proceed with caution.

We are all about innovation, but innovation doesn't come in the form of gimmicks and widgets.