Large Group Question

[ABC]

If you have a 70% loss ratio that is huge selling point for carrier to take on the risk with good rates.

Annual medical premium(fully insured) on case this size is $400,000. That gives a projected profit to the carrier of $120,000.

You could make this argument all the way up to about 80% loss ratio.

If you have carriers not releasing rates then they are either a bad group or the current carrier has a huge advantage over network discounts.

There are a ton of problems with working these mid size cases especially if you do not have the relationships in place with the carriers. The sales rep want to aline themselves with the broker that has the relationship with the client.

 

[djs]

Something is missing in this story. I don't do any large group, but it should be structured to offer the employees a choice of carriers.

I've never seen Kaiser decline to quote. The agent is after a bonus. In fact, most businesses of this size offer a PPO plan and an HMO. The HMO is frequently Kaiser.

Don't even try the individual route on this. You would not do anyone any favors, not even yourself in the longrun.

Dan

 

[somarco]

If you have a 70% loss ratio that is huge selling point for carrier to take on the risk with good rates.

True, but not if it is followed up with 180%.

Even a 70% loss ratio and 25% credible means you are only charging 17.5% of claims with the balance of the rate coming from the pool.

I don't do any large group, but it should be structured to offer the employees a choice of carriers.

That's hard to do on an 80 life case.

You can offer 2 or 3 different plan designs, but two different carriers probably won't fly. That usually happens with several hundred employees, often at least 500.

 

[Hefe]

Thanks for all the input everyone. Just to clear a couple things up.

The loss ratio is more than 200% for each of the last two years ($1.2M on $475k premium). I don't know the year before that.

The carrier is offering 3 plan choices including ppo and hmo so the employees do have options.

I'm looking for answers outside the standard large group option. I'm intrigued by the partial self funded option.

If they were to convert their current hmo to an hdhp, would they have to get a new policy or is that something they can switch at renewal?

 

[VolAgent]

Thanks for all the input everyone. Just to clear a couple things up.

The loss ratio is more than 200% for each of the last two years ($1.2M on $475k premium). I don't know the year before that.

The carrier is offering 3 plan choices including ppo and hmo so the employees do have options.

I'm looking for answers outside the standard large group option. I'm intrigued by the partial self funded option.

If they were to convert their current hmo to an hdhp, would they have to get a new policy or is that something they can switch at renewal?

You're wanting to take a company with 250%+ loss ratio to self-funded? Please explain to me how that is going to help, even with a stop-loss.

 

[somarco]

The loss ratio is more than 200% for each of the last two years ($1.2M on $475k premium). I don't know the year before that.

That's why you have no takers.

intrigued by the partial self funded option.

Find someone in CA who is willing to work with you. I believe Lee Vena has a contact there for his product.

However, you might want to try it on a different case. That kind of loss ratio won't produce any savings.

 

[Hefe]

You're wanting to take a company with 250%+ loss ratio to self-funded? Please explain to me how that is going to help, even with a stop-loss.

I'm not necessarily trying to take them there but rather trying to point them toward some options. It sounds like if an hdhp would save 30-50% on the premium, that would more than offset them having to fund accounts to pay those deductibles. If that savings isn't realistic, then it wouldn't work.

I did get a PM from Lee Vena so I'll see what he has to say.

Like I say, I'm a P&C agent, trying to learn while helping a client that has put a good amount of business with me already.

 

[somarco]

Lee's product is a conceptual sale that can save money but it is not a short term solution.

 

[ABC]

250% loss ratio you really dont have any options for switching carriers. Plan changes in the form of cost shifting could help depending on the current plan design.

 

[Bruce]

I'm not necessarily trying to take them there but rather trying to point them toward some options. It sounds like if an hdhp would save 30-50% on the premium, that would more than offset them having to fund accounts to pay those deductibles. If that savings isn't realistic, then it wouldn't work.

I did get a PM from Lee Vena so I'll see what he has to say.

Like I say, I'm a P&C agent, trying to learn while helping a client that has put a good amount of business with me already.

How did this turn out?

All the advice here seems correct but I would think that the most important factor would be to determine what is/has been driving the poor claims experience. With multiple years of 200% L/R's, it seems fairly likely that large claims, at least in part, are driving the experience. With multiple carriers declining to quote, large claims are very likely prevalent.

It would be very important to get your hands around the number and nature of the large claimants. That is what I would do and that would determine the right course of action, not only at the current renewal but over the next year or two.

My advice would be to partner with someone who has access to self-funded markets (a TPA or large group specialist) and go from there. While the group isn't all that big at 80 EEs, self funding should be an option now, or in the future. You may be able to find an appropriate self-funded option with separate Spec levels for the large claimant(s). Then again, you may not.

The key is that even if the high fully insured renewal may very well be the best (or only) recommendation, at some point the large claims will resolve in full or in part, and you will have a reasonably manageable group health risk. I would not wait until that time to start to manage the health risk of the group. At that point, anyone who can get a quote can do as good a job as the incumbent broker.