Shopping Around for Lower Rates (Benefit Tips ® - © 2014)

The top three Canadian benefit insurers (Great-West, Manulife and Sun) have 65% market share, leaving 21% for three insurers based in Quebec and nine insurers fighting over the remaining 14% of the market.

With such consolidation, you need to carefully plan when you ask for quotes and when you switch suppliers. Insurers keep track of every time an employer asks for a quote and switches carriers. It’s expensive for an insurer to prepare a quotation and employers who shop around too frequently are viewed as insecure clients. Signing up a new client is extremely expensive and employers who switch suppliers too frequently are viewed as a poor investment of resources. Furthermore, an employer who is perceived as asking for quotes or switching suppliers too frequently will not receive serious attention or significant discounts from potential suppliers.

Strategies:

• Only ask a few insurers to quote when testing the competitiveness of a renewal rates.
• Trying working things out with your present insurer before asking for quotes.
• Don’t ask for quotes or switch suppliers more frequently than every three years.

Considerations:

• It’s an administrative burden for you and your staff to switch suppliers.
• The stability of your benefit plan might be questions by employees if changes are made frequently.
• January 1st it the ideal time to switch health and dental administration services in order to minimize the claims cost for plans with annual maximums.
• Switching health and dental administration services will increase claims cost for vision and dental benefits due to the loss of claims history.

While focusing on securing the lowest sustainable cost is often prudent, you may occasionally need temporary cost saving, those bargains will be available if you have been strategic.