Group insurance: double-dip to avoid higher premiums

Employers may be unaware they have the ability to remarket their Group Life and Salary Continuance insurance plans within their rate guarantee period. Failure to capitalise on the option to do so, can lead to the risk of paying over the odds for longer or worse still, receiving a rate increase shock at renewal. 

The impact of recent economic conditions

Practically speaking, economic uncertainty results in a conservative approach taken by insurers to pricing assumptions, given the relatively unknown impacts on claims and plan sustainability.

For employers who have renewed their policies since the start of the Covid-19 pandemic, this would typically result in an additional loading being added to the premium rates of their policies. Should this be coupled with a deteriorating claims experience, any such loading will soon see a group plan risk becoming financially unviable.

Counteracting insurance premium rises

So, what does this look like from a practical perspective? Loadings are often applied at an industry level, meaning that they will often vary substantially across different industries. Naturally, the flow-on effect of this is that these loading amounts will vary depending on the events and the industries most affected. It should therefore be noted, that being able to identify and predict these catalyst events and respond accordingly will greatly assist to counter any pricing impacts to businesses.

Employers who have either commenced a new group risk policy or, have had their rate guarantees expire in the last 12 – 18 months should ask themselves the following questions in order to determine what action they should take: 

• Are they aware of any conservative economic outlook loading being included in their premium rates? 
• Are they sharing up-to-date information with their insurer?
  - Absences of greater than 2 weeks;
  - Early notification of claims or potential claims;
• What additional wellbeing support are they accessing from their broker and/or insurer partners?
• Are they aware of their current loss ratio, future premium projection and, is there a defined strategy in place to reduce claims drivers?

Failure to ascertain clarification on any or all of the above issues will manifest in an employer not taking advantage of the many levers available to them to realise better premium cost sustainability and employee health outcomes.

How can brokers assist?

It is essential that group insurance policies are proactively managed by a broker who delivers a strategic approach and has the ability to respond quickly to changing market dynamics. Brokers should not only demonstrate a deep understanding of the group insurance market and an ability to place risks, but they should also ensure that any employee insurance interacts with the employer’s broader people risk strategy. Effective program management will also see insurers fund employee programs that improve the health and wellness of insured employees.

Employers who effectively utilise a strategic approach to program management, insurer and market engagement will typically see a reduction in their premium, or, a potential extension of their existing terms for a further rate guarantee period (of up to 2 or 3 years). This provides a shield to future, often unexpected, premium cost increases. 

Ensuring that a rate guarantee is in place and also being able to test the market without impacting this guarantee, equates to a double-dip that all employers should consider in the current, fast-moving and constantly evolving Covid-19 environment.

Why wait? Speak to Howden’s experts today to find out how your organisation can undertake a health check on your group insurance plans and see for yourself what a difference Howden can make.