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Employee Group Benefit Specialists
Questions to Ask Your Existing Group Benefits Broker
The cost of group insurance coverage has risen sharply in recent years, largely due to an eroding health care system. But there are still ways to save. A good place to start is the list of questions below. Asking them will help you make sure your group representative is really looking after your best interests.
Is your group representative truly independent?
Many group advisors work with only one or two carriers. This is a problem for several reasons. They may not be shopping for the best rate, and the insurance carrier you are now with may be at the wrong stage of its business cycle. Insurance companies sometimes aggressively seek new business; at other times they are in a holding pattern. You want to be sure your company is seeking coverage from an insurer in the business-seeking mode.
Did your group representative negotiate your renewal rate?
Many group representatives will simply let your group plan renew without even contacting the insurance company. Insurers are in business to make a profit. It's your broker's responsibility to make sure your renewal rate is justified and that you are receiving the best value for your group benefit dollar.
Are you working with a true group specialist?
Group insurance is one of the more complicated forms of insurance planning. It is crucial that your broker be up to date on industry developments and specialize in employee benefit plans. Ask for third-party endorsements and, if you can, speak with some of your broker's existing clients.
When was the last time your group representative "went to market"?
Going to market is when your broker approaches other insurance companies for comparative quotes, to see if your current rates are competitive. As a rule of thumb, this should be done every three years. This requires some work by the broker, but that's what you're paying for.
How does your group representative get paid?
Commissions vary from flat to graded rates, and some brokers charge additional consulting fees. This directly impacts the premiums your company pays and should be fully disclosed by the broker.
What is the Target Loss Ratio (TLR) % of your group plan?
This number is set by your insurance carrier, but it is important that your broker knows to ask this question from your insurers as it can dictate how much of your premium paid is actually available to pay your claims.
For example: if your company pays $10,000 of premium for your group extended health and your TLR is 76%, then only $7,600 out of your $10,000 paid premium is available to pay claims. The remaining $2,400 will go towards paying administration and fees, your brokers commission, and profit for the insurance company. The same process applies to dental, and some insurance companies have now decided to TLR long term disability.
It is really important that because of all these points above, your broker/advisor understands and is a specialist in his/her field. Not understanding these points can cost a lot of money to your company!