Arguably the most commonly used strategy over time to manage employee benefits plan costs is to regularly “market” the benefits plan. The idea is simple – have the various insurers compete for your group benefits business, as you may do with other areas of your business. At the end of the day, you look for the insurer that offers the lowest apparent costs. However, you need to be careful as things are not always as they appear.
Given all these concerns, should plan sponsors be relying on plan marketings as a cost control strategy? While you may like the initial savings, nobody is happy when the rates “whiplash” at the first and subsequent renewals for the reasons noted above. We would suggest that the better reasons to market a plan are: (1) consistently poor service; (2) an insurer that does not like or does not understand your industry; (3) poor insurer technology; and (4) high expense charges. That said, periodically taking your plan to market can also be part of good governance, but the real question is how often should that be done.
Each organization’s needs are unique and warrant a customized solution. We would be pleased to discuss your specific situation with you to identify the best strategy with respect to your employee benefits program. Should you have any questions on the above, please don’t hesitate to contact me or a member of our team.
ZLC Financial is one of the fastest growing employee benefits advisors in Western Canada and we are fortunate to have the best people, resources and clients. Our goal is to work with you to find a better way for your employee benefits plan. We provide this value to you by leveraging one of the most skilled benefits teams in the city – over 250 years of experience within our team of 13 employee benefits specialists. We have been working with businesses ranging from 4 to over 10,000 employees for the past 30 years.
By Dan Eisner