August 26, 2021
Yafa Sakkejha

How to Negotiate your Benefit Premiums [small business guide]

August 26, 2021
Yafa Sakkejha

We're always amazed at how some businesses are able to obtain lower premiums than businesses who have the exact same claims history and population.

Why?

Many insurance companies will set rates based on what the client is willing to pay.

Let's say that Betty, a Manager for Company ABC, has just received their benefit plan renewal, with a re-calculated premium for the coming year. The insurance company wants a 20% increase in the premium. Betty asks why - their broker says it's because they had a bad year with claims.

Betty looks at her inbox: it's flooded with 100 new emails. Two are marked urgent from her boss. She doesn't understand the renewal jargon, and puts it off on the back burner until she has time. The new bill comes in and she sees that it is $1,000 higher. She figures that her boss probably wouldn't notice - so she just mumbles something about insurance companies, pays it, and gets back to work.

Now, let's take Lucy. Lucy works for the company next door, and her insurer also asked for a 20% increase. Lucy kicks up a fuss. She threatens to fire her broker and insurer. Her broker says that he can go back and negotiate. He comes back with only a 9% increase. Lucy tells him where to put it. The broker offers to shop the market. He comes back with a quote from a competing insurer who want a 5% decrease. Lucy says it's still not good enough. The broker shows the quote to her incumbent and they come back with a 6% decrease, guaranteed for 15 months."That's more like it," Lucy says. Her next bill comes in $500 cheaper.

Lucy and Betty have the same benefit plans. The same claims history. The same demographics. But Lucy pays $1,500 less than Betty.

At Beneplan, we don't play games like these. When we offer a renewal, it is based on the best available price. And it's non-negotiable. How? We are able to obtain the lowest fees in Canada because we leverage the buying power of our 450+ employer co-operative. The good people at The Co-operators have given us the lowest fees in Canada, and for that, we're thankful.

If you're not a member of The Beneplan Co-operative, here's what to say to negotiate your premiums down. This is a starting point, so expect a little push-back - but that's a good thing:

  1. What is our Target Loss Ratio? I want it to be 83% (or higher) or I'm leaving.
  2. What is the inflation (trend) factor? If it's anything higher than 6% on Dental or 11% on Health, I'm leaving.
  3. What reserves are built in? Eliminate them. Health & Dental is not risky and doesn't need reserves.
  4. Show me how you calculate my premiums - so that I can calculate them myself.
  5. How much commission does my broker make?
  6. If my claims are low, do I get a refund?
  7. What other fees are there, which are not explicitly stated here?


Of course, if you're tired of playing this game, you can always email us at service@beneplan.ca.

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