8 Principles
focused on maximizing the return on
your investment in employee benefits
Principle 1: Choose your broker
The group benefits and pension business is highly competitive, with hundreds of brokers competing for market share. With so many brokers to choose from, how do you decide who will represent you best?
Before making a choice, it’s important to first understand how brokers operate and how Canadian insurers release quotes to the public.
Insurance carriers will release just one quote on behalf of one client. That means you cannot have multiple brokers getting quotes from the same insurer. As a result, some clients have multiple brokers each bringing back different quotes from from different insurance carriers. Since one slight change in plan design can have dramatic affect on pricing and the long term sustainability of the program, the result is chaotic and confusing. Dealing with multiple brokers ultimately ensures the client does not get what they’re looking for – unbiased, clear reporting of benefits and pricing.
For this reason, we recommend that clients complete their due diligence up front, interviewing the brokers they are considering, then, hire one broker to go to the entire market as their sole representative.
Principle 2: Don’t deal direct
Some corporations believe that by dealing directly with the insurance carrier, they will receive better rates and service.
At the Corporate Solutions Team, we know this to be untrue. In fact, by dealing directly with the insurance carrier, the corporation will receive the exact opposite – higher rates and lack of unbiased advice and counsel.
Similarly, some corporations seek the services of large consulting firms regarding their member benefits programs and pension. While these firms can bring tremendous overall human resources/corporate structure planning, they lack ground floor experience when it comes to pricing, ongoing maintenance and client support of the program.
Having a strong, experienced, passionate team of benefit brokers on your side will give your corporation the insight to maneuver effectively between the labyrinth of insurance carriers and plan design options.
Principle 3: Don’t rely on numbers alone
We have all been there – staring at rate and premium spreadsheet, trying to make sense of it. It seems as though the benefits industry enjoys taking multiple rows of numbers and wedging them into a spreadsheet that really doesn’t tell the consumer anything.
Many times, we have seen rate and premium spreadsheets that defy logic. In fact, data can be manipulated to demonstrate whatever the broker wants you to see. One small change in volume or underlying benefit will have a dramatic effect on the bottom line; and often when the client is besieged with the multiple options and pricing comparisons, their eyes gravitate to the bottom line only.
As we know, numbers do not tell the whole truth.
Principle 4: Plan for change
Change is a natural part of life and business, however, in recent years change has been occuring at a record pace. How does a corporation ensure its benefits program is keeping pace and what is their broker doing about it?
It is too common that we come across benefit plans and pensions that look like they are stuck in the 1980s. For example, health and dental programs that still use a $25/single $50/family deductible to help offset premium cost. Simple inflation has eroded this deductible to nothing. Or longstanding pension programs with fees still based on initial set-up numbers, never having been reduced to reflect the growth of the assets under management.
We have come across broker relationships where the plan design has not been changed or updated for over a decade.
With ever-increasing inflation putting pressure on pensions and benefits, it is essential that clients be kept up-to-date on emerging trends, and change their programs accordingly.
Principle 5: Think long term
We understand that thinking long term is easier said than done, however, when it comes to your benefits program, it is essential to do so.
With the ever-increasing cost of health and dental care, implementing plan-sustainable features will ensure your benefits program will be viable long into the future. As demographics continue to push our work force into higher claiming age groups, empowering your members to truly understand their purchases becomes more and more important.
Implementing plan-sustaining product features will not only keep bottom line premium cost in line today, but will also ensure your employees and their families are happy, healthy and productive well into the future.
Principle 6: Make informed decisions
It is vitally important to work with a brokerage firm that is up-to-date on changes and marketplace trends. Not only should your broker be savvy in today’s benefit marketplace, but they should also have the experience and carrier relationships to get you what you want, when you it.
There are many brokers in the marketplace that serve one or two group clients, however, benefits and pension is not their core business. This translates into misinformed decision making, as the broker truly does not understand the client’s needs, or the products and services available to them.
When working with a brokerage firm that focuses on benefits as their core business, the client will receive specialized knowledge and committed expertise.
Principle 7: Don’t assume you’re compliant
Over the past decade, compliance has become an entity of its own. With so many government regulations, and special interest groups, it is vital that corporations stay current on new regulations and guidelines.
The CAP guidelines for accumulation plans are rigorous, and were put in place to set standards and protect employees. We have found many employers are unfamiliar with the guidelines, leaving themselves open to scrutiny and possible fines. (Not to mention dissension among their employees).
Member communication is a key aspect of compliance. Paper based, electronic and face-to-face member communications will help ensure your company is meeting the necessary requirements.
Furthermore, momber feedback and communication will protect the corporation from spending resources on programs that their employees may take for granted.
Principle 8: Consider international differences
Although Canada and the United States are similar in many ways, the treatment of employee benefits is completely different.
Having a solid relationship with a team of experienced benefits professionals will ensure that the management of your Canadian operations is seamless and competitive.
We understand how time consuming it can be for a U.S. parent company to comprehend the benefit and pension systems in Canada, (particularly with the presence of a national healthcare system). We provide you with a team of benefits professionals who understand the specialized needs of U.S. parent companies and bring tangible value to the table.
