Shopping The Group Insurance Market For The Best Price In Alberta
If you own a small or medium sized business in Alberta
, the issue of offering group insurance via a group benefits plan has probably already come up. Either you have one in place now or you have considered offering benefits to your employees before. This is a major cost for your company, and can significantly increase total payroll costs. How do you make sure you are getting the best value for your money when shopping for Group Insurance?Get a quote from all the major players
There are a number of major insurance companies you should be getting quotes from when shopping for a group benefits plan. Not all these companies offer every kind of insurance that you would need to build the entire Group Benefits Insurance Plan. Here are the following major components of a group insurance plan:
1) Life insurance (on employee and possibly spouse and children)
2) Accidental Death & Dismemberment coverage
3) Prescription Drug Plan
4) Extended Medical Services not covered by your provincial health care plan
5) Dental Expense Plan
6) Short Term Disability
7) Long Term Disability
When one specific insurance company ca not offer coverage on the entire plan, another company can step in to fill the gap. For ease of administration, either the broker compiling the plan or the insurance company acting as the lead on the plan will administer the whole thing as one group, and divide premiums accordingly for each insurer.
Here are the major group insurance players, and the areas they specialize in:
1) Manulife Financial: full service group provider. Not the most competitive on disability but strong everywhere else.
2) Great West Life: full service company. A well rounded group provider.
3) Sun Life Financial: does not offer disability coverage, which has to be farmed out to another insurer. Very strong at administering groups well.
4) RBC Insurance: does not offer group medical, drug or dental coverage. Very competitive on group disability insurance.
5) Alberta Blue Cross: Very good drug, dental and extended medical care for groups. They do have life, disability and critical illness, but these are underwritten by other insurance companies.
There are a number of other lesser players in the group insurance market who could offer your company a great price. Getting comparisons across these major companies would be the first step, and then possibly researching additional group providers.
What is needed for a Group Insurance Quote?
Your group insurance broker or specialist will ask for the following documents in order to "survey" the market and design you the best possible quote:
1) An employee information sheet. This will have the names of all employees, their age (date of birth), gender, family status, start date with your company, annual earnings, description of their job duties, number of hours worked per week (are they full-time or part-time), etc.
2) A group benefits checklist, or wish-list. You will have to give a full description of your business, the industry and types of work the employees do, how long you have been in business, types of compensation paid to employees, anyone currently on disability, etc. A good group insurance specialist will ask some softer questions, like what is most important to you: product quality, low price or excellent ongoing service. Then you need to choose which benefit components are most important to your plan (and desired by the employees) and which are least important so your group insurance plan can be tailored to your needs.
3) If you currently have a group insurance plan, a copy of the group booklet needs to be provided to the group broker so they can compare apples to apples and show you some possible enhancements or ways to save.
4) Again, if you have a group insurance plan, a copy of your last renewal rate and billing statement will need to be provided. If you have the information, any data on recent claim rates would also be very helpful.
Once all the data has been collected, your group insurance specialist will submit it to the market. This means they will get quotes from all the insurance companies, broken down into specific components of the plan. This will allow them to see if combining all benefits with one insurance company is best or if the plan should be split up among two or more insurance companies.
This usually takes about two weeks before all quotes are received and an analysis has been done. Then, the new group insurance plan is ready to be presented to you.
How often should you shop for Group Insurance?
Based on the claims experience you have had, your annual premium renewal of your group insurance may go up. This is often due to high claims for dental work and prescription drugs. If your plan is new, and this is your first renewal, you will often find that your employees had pent up demand for things like dental work, and these claims far exceed the premiums the insurance company collected on the policy. The insurance company will definitely raise your rates at annual renewal if this is the case.
You might think that going back to market is a good idea, and shop again for a lower rate. This might be true, but an insurance company looking at your existing plan will consider all factors:
a) How new or old is the plan, and how many claims were submitted in the last year.
b) Does the employer shop for a new insurance carrier regularly? Is there any loyalty to the insurance company over time?
c) Are the existing premiums fair based on claim rates by the employees, or could they do better.
d) Are there any abnormal claims that pushed things up that are unlikely for the new carrier, like one of the employees dying or going on long-term disability?
The new insurance company wants to have a reasonable chance to make a profit off your group insurance policy. If they believe the employer will get a new group policy next year, and claim rates will be higher than premium collected, then obviously the plan is a losing bet. If there are some reasons why claims were pushed up recently, and the existing insurance company is trying to recoup losses, there might be an opportunity to take over the group; especially if high claims are due to extraordinary events unlikely to occur again anytime soon.
I suggest you try not to shop for new group insurance rates too regularly. Maybe survey the market once every 3 years to see if you are getting the best deal. After a major claim event, like an employee dying or someone claiming long-term disability, there could be an opportunity to negotiate a much lower rate than the renewal being offered by your current group provider. The best advice is to try and stick with your current group insurance provider as long as you can. Do not rush out and try save a few cents without a good reason to do so. If you are getting terrible service, or claims are not being paid quickly, or there is added cost to your company to administer the plan, then these are good reasons to go shopping. If your current insurance company is doing a good job, then I suggest sticking with them. Showing some loyalty will often be rewarded over time.
If you are interested in getting more information about group insurance or your current group benefits plan, please contact us at Life Guard Insurance. We partner with the best group insurance specialists in Calgary and Southern Alberta, and can help you find expert advice.
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