What is a renewal?
In the group benefits world a renewal comes at the end of a year term for your benefits plan. After this period the insurance company evaluates how much your company used the plan and assesses a new price to match their perceived risk.
That's right the price of your benefits plan will change.
It worth noting that during the first year this period is often extended beyond a normal calendar year, typically 15-18 months. If you have a had a benefits plan for your company for at least a year you know what it's like to deal with renewals. For a lot of companies this can be a time of immense pain, mostly felt in the wallet area.
Hopefully, you designed the plan to be sustainable from the get-go and were aware of the 5 things you need to know before you start your first benefits program. However, the unfortunate truth is a majority of companies will face a higher renewal price then they were expecting.
In this article, I want to share with you a few options you may have to mitigate a price increase if you have the misfortune of being proposed one.
Alter The Plan
Like the insurance company, you should also be evaluating the usage of your plan. Look for areas where your employees make a lot of claims, and areas where they don't. Often times a benefit class will be included on the plan that really doesn't get used much, or at all. For example, you may have vision coverage on the plan but no one has ever made a claim! Why continue to pay for a benefit that no one is using?
Of course, altering the plan is not ideal. You want to provide the most comprehensive coverage you can. Insurance is bought to protect for the unexpected, not the expected.
Having said that, the cost is a reality. You can evaluate the usage of your plan and make compromises in order to save. Consider the magnitude in which the price increase affects your business in comparison with removing, or lowering coverage on benefits classes that are seldom used.
Increase Employee Contributions
If you aren't already splitting the cost with your employees this could be worth considering. When the cost is spread out amongst everyone the per person cost is easier to stomach.
Consider ABC company. They have 10 employees and the monthly cost is $100 per employee or $1000 a month. $12,000 a year. By splitting the plan 50/50 with the employees they spend only $500 a month, or $6,000 a year. On top of that, the amount paid by the employer is tax deductible.
Each employee is then responsible for $50 a month. Compare this $50 expense to their earnings and most people with find this is a very insignificant burden when you consider the huge amount of coverage they get in return.
By spreading some financial responsibility to the employees you can avoid altering the plan, lowering coverage, or at worst case needing to cancel altogether.
Look At Other Carriers
There are some advisors out there who believe you should switch carriers every 3 years or so. This fact on its own is disputable, as there are many factors besides price to consider but the notion is rooted in a truth. It pretty much breaks down like this:
1. Insurance companies want your business.
2. They love to compete with each other.
If you have been getting high renewals consistently throughout the existence of your benefits program it is definitely worth getting quotes from other carriers. Beware of agents who only deal with one company!
You can always apply for quotes with no obligation to buy. In fact, Easy Group Benefits makes it super simple.
Comparing prices amongst carriers at the very least can be used to negotiate a better price from your existing carrier. The upshot is, and this frequently happens, you find that you are actually paying more than you need to right now and another carrier can offer you a significant discount.
You switch carriers and pay less. On top of that, now that you have had a benefits plan for some time your employees are less prone to overuse the plan. This means you are resetting at a lower price with less chance of ugly renewals.
As mentioned there are of course many diverse factors that come into play when deciding to switch carriers but it never hurts to look!
How Much Is Your Agent Getting Paid?
This is a hugely overlooked factor as the agents don't really want you to know how much they are making!
But what they REALLY don't want you to know is that their commission is adjustable!
The commission is directly worked into the monthly premium you pay. The advisor takes either a flat fee or a sliding scale. It is known to go as high as a flat 15% commission.
If an advisor is doing outstanding work for you and providing value on a regular basis then maybe you are comfortable paying this. There is nothing in itself wrong with the advisor getting compensated, but there is something wrong with advisors getting paid that aren't doing a good job AND your premiums are increasing year after year.
Beyond the regular negotiation tactics, an advisor always has the option to take a little less to keep you as a client. If your premiums have been constantly rising and your advisor has done little to impress you ask what they are getting paid on this renewal and see if they are willing to play ball!
I hope this article has given you some firepower to use for your next renewal. If you aren't already, get the best price, and the best advice on your upcoming renewal with Easy Group Benefits.
Use our online renewal tool to compare your options: https://www.easygroupbenefits.ca/already-have-a-plan
Or book an online consultation with us to discuss in more detail:
https://easygroupbenefits.as.me/schedule.php
Questions? Send the author an email!
Benjamin Bondar
ben@easygroupbenefits.ca