High Risk Occupations, Unions & Group Benefits

Jul 16, 2018

  1. zwcoop
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    zwcoop Expert

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    I know virtually nothing about group benefits in general and have only worked with individuals and small business owners in the past. I have a good buddy that has worked for the railroad for a long time and use to be the general chairman of their union. I was catching up with him recently and we started talking about their benefits and especially their group disability coverage. They go through a broker currently but haven't been happy with the costs/benefits of the carriers that they keep bouncing between. My understanding is that because working for a railroad is a 'high risk' occupation, a lot of carriers won't write it.

    Now that I'm independent I can reach out to most providers out there but I don't even know where to start. Anyone out there have a suggestion on carriers that may write this business and what the overall process for putting together quotes for group coverage.
     
    zwcoop, Jul 16, 2018
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  2. Tim Resnick
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    Tim Resnick Super Genius

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    IF they are Union, my understanding is 'its and inside job' (but if you got a connect, this would help).

    How many members in this RR group

    Are you currently writing group plans?
     
  3. zwcoop
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    zwcoop Expert

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    I believe his local has around 60-70 guys.

    I am currently licensed and contracted to write group plans ... but have zero previous experience with this.
     
    zwcoop, Jul 17, 2018
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  4. Tim Resnick
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    Tim Resnick Super Genius

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    You may want to get some help from your local rep or contact a org that does these type of package plans. ESPECIALLY, if its a large account (over 50 lifes is considered a large account).

    Mr Leevena is an expert in this area.
     
  5. gravi8729
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    gravi8729 Expert

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    You have to contact your local agent or you can check and compare online also.
     
  6. leevena
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    leevena Guru

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    Thank you Tim for the nice compliment.

    ZWCOOP, you are correct about this group being a difficult placement for DI. This is due to a few factors; lower income jobs, presence of a union, higher frequency of injuries/disabilities, the small size of group, and a few more. But this does not necessarily preclude a positive and stable relationship between client and carrier.

    What did strike me is the statement that the union is not happy with the cost/benefit of the carriers. This is a big red flag, and tells me there is a much different issue. With a group of 60, the claims incidence should be very low, thus creating a hugh gap of high cost to benefit. To me, this high cost to low benefit is standard, if the client does not see this, then their expectations are not in sync with DI reality.

    DI carriers create a pool to place their risk, the experience of this pool is the predominant determinant of the rate cost. (A group of this size has zero credibility (for pricing), in fact a group of 250 lives with 1 year of claims experience has about a 5% claims experience factor). Furthermore, because of this the premium rate changes from year to year should be minimal, short of the group either aging drastically or significant income changes.

    I would obtain quotes from a few carriers which would give you a good understanding of their costs. The lower cost carriers usually have done a better job of risk selection and claims management, thus the lower premium rates. Remember, these will be manual rates, with little to no room for adjustments.

    Then sit with him and educate. May or may not be worth your time.

    The prior comments are all correct, especially the incestuous relationships between vendors and union, and the use of another agent. My past experience of working with unions is that they are demanding, inflexible, and can be a hugh time suck on your calendar.

    Good luck.
     
    leevena, Sep 9, 2018
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