Renewal Pricing - Group Life & Health Insurance

Pooled Benefits
A complete market survey every 3 years with interim analysis of changes to demographics keeps the pooled rates competitive. Differences in plan design must be considered when analyzing competing rates.

Experience Rated Benefits
The object of the experience rating process it to determine a premium rate that will be sufficient to cover the cost of claims plus expenses for the next policy year.

The quantity of members and number of years of available experience impacts the reliability or credibility of the historical claims experience.

Price increases by benefit providers increase the average cost of each claim. For the past one and a half decades, the inflation rate for health benefits has averaged twice as high as the general Consumer Price Index (CPI).

There are factors that contribute to increasing the frequency of claims or plan utilization.

  • aging workforce
  • cost shifting by provincial plans
  • technological advances
  • creative billing
  • public awareness of health issues

Claim Reserves
An incurred but not reported claims reserve (IBNR) reflects the potential claims that the plan is liable for but has not yet paid. It is used to gain an accurate number to use when estimating future claims by compensating for the claim lag time.

The IBNR is established at the end of the first year and should accurately reflect the claim lag. At the end of the second and subsequent years, the IBNR is recalculated and the previous year's IBNR is subtracted so that only changes are charged to the claims experience.

Expense Factors
Review the components of the expense factor to determine if they can be reduced or eliminated.