Health insurance premiums going up has become the norm and usually between 5% to 25%. When we discuss our results at lowering these costs by 10%-35% with agents most agents respond with, “how are you doing that?” seems strange that they don’t know, yet have usually been in the business for 10+ years and have many clients. If the agents don’t know, obviously the clients aren’t even close to knowing. So here are three tips to helping you.
1) Competition is key. Many clients have had their same agent for 5+ years, but sending it out to another agent to shop the same markets at the same time will not help you. Why? Insurance carriers will not provide one agent a different figure for the same group than the other agent. You have to segment the market and do it strategically. Both agents could obtain a quote from Blue Cross, but if one had Blue Cross and the other had Cigna you may see better results, pitting them one against the other. That is competition.
2) Limit the increase incentive. Why do you pay your agent more for a rate increase? If you have not moved your account to a fee for service model you’re incentive’s are in the wrong direction. We set up a fee for service contract between our client and the agent that has incentives structured to benefit the client and the agent for the direction we want to achieve. The agent should get a fair compensation but they should not get a raise just because your premium went up by 10%.
3) Keep claims cost down. You have got to educate your employees about how to use the system. There are many tactical ways to reduce the claims cost with new technology to help keep employees taking their meds, to transparency in non-emergency procedure costs to education on when and why to use the ER versus the urgent care. If you receive a rate increase higher than 15% you can usually conclude that you had some claims that year that drove that rate increase, although they rarely bring it back down, do they? Control cost as much as you can and it starts with education. If your health cost go up by $100,000 a year, doesn’t that effect your ability to give a raise to employee’s? Educate them why it needs to matter to them.
These three tips are the tip of the iceberg to reducing the cost and they are just a few of the things we use and teach our clients during an engagement. How did you fair over your last renewal?