It is always best to review your existing group health insurance plan before the renewal date to ensure the plan is fully operational for your staff.
In this blog post, we are going to share with you some insider tips on what your company needs to take into account prior to the next renewal.
Table of contents
1. Spare your company 3 months prior to your next renewal date
A window of 2-3 months is an ample amount of time to review the current group medical insurance plan and research for alternative insurers’ offerings. Your existing insurer is likely to give renewal notice 4-6 weeks beforehand, which leaves you little time for thorough consideration. It is therefore useful to set a calendar reminder for yourself.
There are 2 ways to understand feedback from employees. You can host a simple survey to ask about their experience. Key areas of interest usually include protection coverage, ease of accessing network doctors and claims application and processing.
2. Why is there an increase in the premium?
As the renewal of a group medical insurance plan involves creating a new contract between the insurer and the company, proposed changes in benefits and premium by the insurer are possible. It is helpful to understand the following factors that can lead to an increase in premium, in order for you to have a better assessment.
2.1 Rising global medical costs
Premium increase will likely be due to the global inflation in healthcare benefit costs, which the projected average increase for Asia Pacific in 2021 is 8.5%.
In 2022, it is also anticipated that factors such as increased utilisation due to deferred care during COVID-19 and increased spending in the health system in preparation for the next pandemic will drive up medical costs.
Check out our free guide to learn more about trends in group medical insurance: Guide to Employee Wellness in SMEs 2021.
2.2 New customer discounts in premium
Another possible reason would be the premium offered by your insurer in the first year was very competitive in order to acquire you as the new customer. The insurer may then need to increase the renewal premium in order to restore a profitable margin.
2.3 High claim ratio
Insurer will review the historical claim ratio to determine the premium. For instance, if the claim ratio is relatively high in the past year (e.g. over 80%), then the insurer may propose an increased premium (or decreased benefit levels). In other words, the higher the claim ratio, the higher the new premium.
2.4 Tailor-made plan versus Package plan
Group health insurance plans on the market are largely categorised into Tailor-made plan and Package plan. If budget is an important decision factor for your company, then choosing a package plan will give better control to the premium.
This is because premiums of tailor-made plans are defined based on the historical claim ratio of the company, causing more fluctuations in premiums. Benefits coverage and premium table of package plans are predefined by the insurer, hence you will find more stable premium levels over a number of years.
2.5 Community-rated versus experience rated plans
You are also advised to ask your insurance advisor whether your plan is experience rated or community rated. Smaller companies are usually under community-rated terms, which means that renewal rates are based on the entire client portfolio’s performance, not your company’s claims specifically. This divides the risk.
Under large firms, almost all plans are experience-rated which means that renewal rates are based on your company’s claim ratio. This, in turn, means that the more your employees claim and have large claims, the more expensive the premiums will be at renewal. Some companies put in place claim containment strategies to minimise premium inflation.
3. Buy a group health insurance plan through insurance brokers
When you shop around to compare insurance plans, indeed insurance brokers can provide you quotations from different insurers.
In contrast with buying group health insurance directly from an insurer who only persuades your company to buy their plan, the health insurance brokers can narrow down all the plans in comparison to only one specific plan that exactly caters to the specific needs of your company.
All of this is done without any additional costs on your side so you have nothing to lose but to gain by purchasing a group health insurance plan through an insurance broker rather than directly from an insurer.