Over the last few weeks, we continue to hear from benefit advisors and employer groups about an absolutely brutal season of 1/1 renewals beginning to emerge. Most often, we’re hearing about 20% increases (sometimes 15%, sometimes as high as 25%-30%).
To put this into context, for most employer groups this represents:
- A 20% increase to their 2nd — or 3rd — largest expense item on the income statement, and
- A significant jump over the 5% - 10% trend many employers were expecting this year
Where are these increases happening?
While fully-insured books of business for the BUCA carriers seem to be receiving the most consistent and the most sizable increases, we are also seeing clients dealing with significant leveraged trend increases on stop loss — particularly in certain captive programs.
What can employers do about this?
For a renewal season like this one, it is tempting to give into discouragement and the belief that, particularly for small employers, there are no possible avenues of relief. However, with a little bit of additional effort, it may be possible to get out of the 20% renewal trap. The available options for a given employer group will vary based on a group’s current funding situation:
- For groups that are fully-insured: Explore alternative funding! While not a guaranteed solution to solve for a large renewal, transitioning to a level funded, traditional self-funded, or captive solution may be the best way to mitigate a large, fully-insured renewal increase. This will be most applicable for groups with available, positive claims experience (an 80% loss ratio on available claims will likely provide the most competition in the market for a group transitioning to alternative funding). For many employers, level funding may be least disruptive way to affect this transition.
- For groups that are already alternatively funded: Explore your options! Often a group’s renewal increases on stop loss or captive membership are not always closely tied to individual group experience–rather, they are based on the performance of the larger pool of risk for the insurer. If that risk pool is performing poorly, individual employers will suffer regardless of their own experience. Exploring other funding mechanisms or other providers within a funding mechanism (i.e., taking favorable claims experience to a different captive) may also provide meaningful rate relief.
How can ClearPoint Health help?
ClearPoint Health offers benefit advisors and their employer group clients a one-stop-shop to access several alternative funding solutions and providers through a single RFP process. These include: tailored captive programs that provide new savings opportunities through risk pooling, cost stability and flexibility; level-funded solutions that offer predictable monthly costs and reduced premium taxes; and a traditional stop loss panel to maximize market choice and negotiating leverage
Don’t let this renewal season get you down – your 20% renewal increase is not a guarantee! You can find meaningful relief by exploring your options within the broad market of alternative funding solutions and providers.
By: Andrew Sullivan, Senior Vice President of Growth and Partnerships