Because of the pricing model offered by traditional major insurance companies, many employers are fearful of the notoriously high renewal rates that are synonymous with making claims. Why would you attract quality people, retain them with a good employee benefit plan and then avoid telling them to use the plan so they can maintain their health?
You shouldn’t have to do that because it does not make any sense!
Why Does This Happen?
This happens because over 95% of employers buy their employee benefit plan using the “standalone” or “experience-pricing model”. They have never heard of the pricing protection offered by pool priced employee benefit plans, a model that groups together a large number of employers to protect each other from large and unreasonable premium increases.
With the majority of Canadian insurance companies wanting to make a profit for shareholders, they make sure they recover any losses in the next policy year. When an insurance company does this, it is not uncommon for you to see a premium increase of 30-40%.
To give you an example, we have renewed most of our pools this year with increases of 3%, 5% and 2%. My clients are complaining. A client who moved from our benefit pool to an experienced priced plan last year has just received a 60% premium increase.
Beware of insurance companies that only speak of attraction and retention of employees because they do not tell you how to maintain your employees. If they do, you will have a very large premium increase.
The ROI of a pooled employee benefit plan is high because employees are obtaining maximum usage from the plan, absenteeism goes down, work injuries go down and you can feel comfortable with your decision in the end. It fits within your budget.
There are very few insurance brokers in Canada offering pooled benefit pricing to their prospects and clients. A broker specializing in pool plans is one of your advisors that can help your business grow.
For more details on pooled plans and how they work, click here.