Most people would concede there has been a shift in the industry over the past decade. As health care costs continue to rise, so has client demand for a more predictable rate environment. I have always made it a point to ask advisors what their small group clients need; and the number one response over the years has been stability.
In part one of this series I spoke high-level about the advantages of a pooled product, and how small business owners can attain greater cost certainty by leveraging economies of scale. Now, I am shifting my focus to the advisor; demonstrating how advisors can provide a unique solution, while freeing up their time to develop more meaningful relationships with their clients.
The renewal process can be a painful experience and generally goes something like this; the renewal rates come from the insurance company representative; you stare at it for what seems like an eternity while you muster up the courage to open the file; you put your hand over your eyes but peak between your fingers as if you’re watching a horror movie; you either breathe a huge sigh of relief or a tear trickles down your cheek. More often than not, you’re crying like a school girl at a Shawn Mendes concert. You contact your insurance company representative to begin the dog and pony show negotiation process, and perhaps review cost containment strategies to reduce utilization. Or, you start gathering all of the plan data to market the group, and see if another insurance company is willing to accept the risk at a lower price – knowing full well that you’re likely to be back in the same position at the next renewal. Sound familiar?
Providing stability
With Sirius Benefits, the pool renews every June 1st so you’re not caught up in the renewal cycle month after month. For ten months of the year you can focus on growing your business and looking for creative ways to interact with your existing clients; and when you get the renewal, you can confidently present it to your client, knowing that the expectation you set is in line with the outcome.
Another benefit of the pool is the flexibility associated with rating each group as a small subsection of a much larger group. While insurance companies will standardly decline certain industries or groups with high family content, Sirius Benefits will accept these risks. In fact, Sirius Benefits will even add a one-person company because they’re treated as one plan member in a pool of thousands.
The same concept applies to virgin association plans. I’ve never met an insurance company underwriter that felt comfortable entering into this type of arrangement. Not only are they costly to administer, but there are inherent risks associated with participation and financial stability. If only a small percentage of the association members sign up, there’s not enough spread of risk to keep the rates stable. If the rates aren’t stable, the low-claiming groups might leave and the high-claiming groups might stay. The Sirius Benefits small group pool is the perfect vehicle to accommodate a virgin association plan because it has the scale to support a stable rate environment.
It’s important that advisors continue to add tools to the proverbial toolbox. Being able to provide the right solution to a client at the right time is powerful. And while the Sirius Benefits small group pooled product may not always be the right solution, having a hammer in your toolbox when you need a hammer is better than only having a drill.
In part three of this four-part series, I will focus on the advantages to the plan sponsor; how business owners can leverage unique products to support their most valuable assets – their employees.
