Insurance Made Transparent

Collaboration is the key, knowing where to look creates the success!  We are very happy to be giving a check to Junior Achievement with money we created for Baker Electric.  It’s such a winning proposition for everyone it’s just silly not to get started.  We identify areas of cost savings based on subject matter experts in those specific industries and then we get to work to pull out those found savings.  Prior to the work commencing we make an arrangement that IF we located a savings we will both donate a percentage back to the non-profit of the clients choice.

Our specialty is insurance and for most firms we can successfully save them between 15%-60% off their premiums on both property casualty insurance (property, liability, auto, workers compensation, etc.) and group health insurance with a 98% success rate.  That is FOUND money!  We do not alter coverage, and many clients do not even change agents or insurance carriers.  This was fun and we can’t wait to make even more of a difference for other for-profit and non-profit firms.

RateCraft – Baker Electric – JA check Dec 2014(2) RateCraft - Baker Electric - Junior Achievement - Accretive


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?

What is that increase?

Liar, Liar, Pants on FireLiar, Liar Pants on Fire

January renewals are being seen and far uglier than one would think – 50%-400% increases for some. Why? Agents are being told it is due to losses, but here is California premium and loss ratio for workers compensation – average loss ratio for the last 10 years is only 66% – that means they are making money.

Or are business suppose to pay what the insurance carriers normally make in investments too?

Workers Comp CA Insurance carriers premium & loss ratio 2011

Like never before – you have got to look at your renewal early and be strategic or you will be stuck with whatever they serve up to you.

Wet DiaperThis is kind of like a wet diaper too! I am sorry to say the state of workers compensation in California is not good, quite frankly it’s bad, very, very bad.


If you do not have losses you could expect to see a 15%-35% increase, if you have losses you could expect to see 25%-55% increases and this is 2012. Brace yourself because rates for many carriers are being projected at another 10%-15% increase starting January 2013.

What can you do?

Be proactive, the worst thing you can do is wait and see. We hear this often that a prospective client wants to wait and see what their agent can bring to the table. But what if, they were not thorough? What if the renewal proposal is delivered with only a few days remaining and the renewal is awful?

Keep your losses under control, hire wisely, pre-screen, exit interviews, keep morale up – losses are being file post termination due to the poor economy, layoffs and low morale and the insurance carriers are not fighting these claims.

We can not emphasis enough, that being strategic with your insurance portfolio is the best way to minimize an increase.

While meeting with a client yesterday, we actually were laughing at how even though the clients business has grown since we have been working together, in locations, vehicles, sales, we have reduce the premium by 50% over the last ten years. The workers’ compensation has ebbed and flowed with the market, but their rate increase this year was only 2%, they had offers at well over 50% increase, but with strategic work they only saw a 2% increase.

Cheers! Here is hoping you don’t get stuck with a wet diaper!

You Have The Control Switch

The Simplest things can make a HUGE difference

This is part one of a multi- part series on small and simple things making an impact on your health insurance bottom line.

Have you ever noticed that looking at a big project seems insurmountable but if we break it down into steps it seems achievable?  It reminds me of many various quotes

Insanity is doing the same thing in the same way and expecting a different outcome – Chinese Proverb


A journey of a thousand miles begins with one small step

Chinese Proverb


Don’t judge each day by the harvest you reap, but by the seeds you plant – Robert Louis Stevenson


Cost reduction on insurance is effected by small steps that you can make now and begin today.  Business’ today have an opportunity present to them to create change.  Our nation is one of the most obese, we have high blood pressure, high cholesterol, have more cancer than most other countries and yet we pride ourselves at being a world changer, so let’s change our world.

We have some inherent problems but the more I dig through the battle of cost reduction I see that we do have more choices that can effect change but we are just not making them.  Let’s not wait for people to just  “get it”, let’s create those changes.  We will address many areas that can make an impact and encourage you to give it some thought and then to take action on a few.

Did you know – employees that misuse the emergency room escalate the companies health insurance costs?  How simple is it to hold some informative meetings with your employees to assist them in making good choices that will both help them with their health needs and help minimize your costs.  A simple thought may be that the insurance carrier pays,  so that is why you have the insurance, but I encourage you to think again.  When your group policy renewal comes in and they claim that the overall group cost is high this can be the reason your agent can not negotiate a better rate.  What they don’t tell you is the details, many times it is a small area that life style changes could make a significant impact.  The emergency room is one of those areas, and who really likes visiting the emergency room anyways?  What are the stats on this misuse?  Over 44% seems to be a fair number based on various reports, we have read – see an article link below.

It takes a long time, if it is truly NOT an emergency compared to others waiting they will make you wait.  I have been in one myself and they take hours to assist some patients and the bill is astronomical.  A friend of mine used one just a few years ago, he was sick with the flu and felt even worse over the weekend, he decided to go to the emergency room, he received a $5,000 bill weeks later and he was no better for it.  The fact of the matter was there wasn’t anything they could do for him, he just had a bad flu.  He needed rest, fluids and a nurse to discuss his situation to see if it warranted any extreme measures such as an emergency room visit, and if he was not better by Monday he needed to get into see a doctor.  This same $5,000 bill could have been a $100-$250 doctor visit and additional tests could have been done for under $600.  Do you see how that can cost your company more?  If you have 100 employees and 15% of them use the emergency room once a year at  $5,000, that is a cost of $75,000 a year and this is the non-necessary expense cost, not the big cost that we want the health insurance used for.  Easily solvable.

Did you know – most people use the emergency room because they don’t know who to call or speak with about a medical situation or they have not designated a primary care physician that has a remote service for off  hours?  How simple is it to have your health agent in conjunction with your carrier set up meetings and have your employees be informed and ready for a health situation, and to help them choose a primary care physician that has a nurses service.  This small item is very achievable and can make a difference in the cost of your plan in the long run.  I personally called the nurses service  when my daughter was born at least three times, had I not been able to do that I too would have gone to the emergency room and incurred an inflated cost.  The cost was included in the plan design and all of the calls never resulted in an emergency room visit.

Small changes can start moving your results in the right direction.  We have many more ways to move your company in a forward direction to reduce cost, stay tuned.

I’ve taken the temperature of many businesses in the past year and have found that many are suffering from a very high fever.  The high cost of health insurance, is making them ill.  Ironically, it seems to be the CEO and CFO that are the most effected and of course the employees that end up  losing their jobs.   The benefits department is concerned about raising deductibles, changing doctors, the administrative workload of change to the current staff and having to deal with the fall out and certainly that is understandable.  However, isn’t it a bit short sided to be too concerned about the employees that still have a job, most have no plan to leave their job without a replacement job and there are plenty of individuals ready to fill any empty positions?  Keeping a business health financially should be the number one decision of every employee and employer, as it provides a long term employment opportunity that can weather difficult times and ultimately improved the well being of all employed.  With out financial solvency and profit most businesses will not and can not survive.

The remedy is not fast, it is a long term solution and it is based in transparency.  You do not have to receive a rate increase; contrary to what you have been experiencing the past few years and current trending predicts, the only thing missing is the right tools.  Tools are available to reduce the cost significantly right now and of course a long term solution is having healthy employees.

Yes, even tools your current benefits department and human resources has not discovered.  Most human resource managers have no idea what we do or how we do it, as hard as they try to guess.

Why is the human resource department unaware of how to keep these costs down?

They are experts in human resources they are not usually experts in the function and purchasing of insurance or the negotiation of contracts concerning insurance, even if they worked in the insurance industry before.  Just as I would fail, or even the CEO would possibly fail at the administration of payroll, procedures, COBRA laws administration, etc.  A human resource department may easily not know how to negotiate the best deal on health insurance.  It is not their fault, it isn’t anyone’s fault, it is just the way it is and has been this way for years.  The system is not transparent.

You can’t reduce cost if you don’t know what you should be shooting for.

If you want to win a marathon, you need to know the times that others are winning the race, you need to know how much to train, you need to know about nutrition for sustaining yourself, and you need to know ways to improve your speed.  You do not just show up on the day of the race at the starting line and run when the gun goes off; you will not win this way.

You need a good agent for your health insurance, (by the way, that’s not us, we are insurance negotiators not your agent) but that is not enough and furthermore most businesses judge their insurance agent by the fact that they answer their calls, or are nice to the employees or to them, or they receive a rate increase and the agent brought it down by 5%., or they provide their COBRA administration (they do that don’t they? If you answered no, you already have a poor agent).  Do you have any idea where your premiums should be?  If not, why not?  What is a good rate?  How do you obtain a good rate?  What are others paying?  If my agent isn’t offering a good rate, how do I obtain one?  What services should our agent provide for us? Are they offering us all the options available?

Eighty-percent of all our clients that we save the huge bucks believe they have a good agent, the opinion only changes when they see it in black and white that they did not receive as much as they thought, and paid much more than others.  The best thing about health insurance negotiations is the secret sauce we provide to our clients lasts years.  It is the same example of teaching a man to fish, it will feed him for years, but if we give you a fish to eat it only lasts a day.  We teach clients tools and they can continue to use them for years to come and many of our clients reduce their health insurance premiums between 5%-25% the first year.  Pretty significant savings especially considering many are only seeing rate increases.


Recent industry article  on health insurance

The insurance market definitely made a shift for January 2012.  In usual form the market was slow at producing quotes, releasing loss history and wrapping up the year but the end result were plenty of rate increases for workers’ compensation in California and group health insurance across the nation.  The news wire is posting rate increases for the property and liability segment too.  What this means for 2012 is that a smart methodology for managing this cost is in order.  Here is a short list for 2012, happy cost cutting!

  1. Workers’ Compensation must be reviewed and marketed.  Do not wait until your renewal proposal is presented, do it 60-90 days in advance.   The carriers that did have the best rates have shifted and you may anticipate another shift in October.  Did you know that there are over 20+ different workers’ compensation carriers?  How many quotes have you seen?  Did you know that some agencies have exclusive programs with special filed rates?  Did you know that as consultants we have all the filed rates of every carrier and how many credits are available for each – does your agent share that with you?  Did you know that even if you are with a SIG or Captive you can still lower your rates?
  2. Health insurance, shopping it does not get the results.  Health insurance is a different animal and you MUST do it strategically it is not about having four agents quoting on your account.  It is about power and clout and how to get it, they’re tools that once you know them you can always manage this process with great results.  What you shouldn’t do is take a rate increase – chances are it is not necessary.    It is also time to start getting your employees educated in managing their own health.  If you want lower costs and employees want less burden it starts with us all individually.   We have a country plagued with obesity, diabetes and cancer.  The US ranks us in the top 10 countries dying of cancer and over 60% can be prevented by lifestyle.  Take a tour of for some enlightening information about how we compare to other countries.  We do not smoke as much as other countries but we are dying of cancer – so what is the cause?  This is NOT a quick fix, but it has to start somewhere and since business are going to effected by low performing human capital due to illness, doctors visits and insurance cost we might as well start the movement.
  3. Move it to improve it.  If you have a renewal date in December or January, move it, move it NOW.  This is the worst time to be renewing your insurance.   Year end, new insurance rate filings, holidays, vacation, family and 60% of everyone else has a renewal this time of year – if you are not the most AWESOME account, meaning no losses and paying tons of money for insurance you are not getting the most attention from the insurance carriers.  It’s easy to change the renewal date, just ask or demand it – DONE!  Pick the date that works for you and your business.
  4. Employment Practice Insurance – Sorry but I think you may need it.  In the last five years I am seeing claims in this area all the time.  The most important source of exposure for California employers is the seemingly ubiquitous class action lawsuits for Labor Code violations.  Once they have been sued, however, employers are sorely disappointed when their carrier contends that the policy contains a blanket exclusion for all wage and hour claims.  The standard verbiage excludes coverage for any alleged violation of the federal “Fair Labor Standards Act . . . or any similar provision of federal, state or local statutory law or common law.”  Defense to retain an attorney may cost you a retainer of $50,000 whether you are in violation or not.  I see claims filed on this more often then the umbrella policy, which about 80% of all the business’ we evaluate have coverage for, so why not this?  This coverage is more readily used in tough economic times as employees find anyway to pay bills or have an employer pay for a wrongful act, whether true or not.  The attorneys are standing by to help them and you need to be protected.  Do not automatically assume you are covered for anything on these policies they are all different manuscript policies – so compare them all by coverage, price and deductible.  As always, weigh the cost and what you feel your risk is for this coverage.
  5. Cyber Liability -“But…I only produce $30,000 of revenue on this part of my business”.  It would seem that it is quite a large subject and the more I read the more I learn you are exposed and it is the new hot crime.  Hackers hacking sites and obtaining confidential data.  My recommendation is to look into the coverage, weigh the cost and decide if you feel it is worth buying and review it every year as an option while comparing the actual claims statistics.  I found this PowerPoint produced by Deloitte that I found at least worth the read. Cyber Crime Report – Deloitte

Have a successful 2012!!

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