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This construction-related business has 87 employees, and as our nation pulls through the recession, has been growing steadily. The projection for 2018 is to add 90 to 95 employees, doubling the size of the company.

Signs of Trouble

For several years this company’s health insurance increases were relatively stable with a loss ratio of 81 to 86 percent.

The first sign of trouble was the company’s 2016 renewal rate, which was at 31 percent.

This business had used the same agent for years, had a great deal of respect for him, and even “liked the guy.” But upon seeing the renewal, it was obvious something needed to be done.

Another option needed—FAST!

The agent quickly obtained quotes from other health insurance carriers in the Atlanta market, and found an excellent option. This plan would take the construction company’s 2016 costs down to just under the current level, while maintaining the same plan design. Of course, the company would have to go through the transition of changing carriers—with a 31 percent renewal rate plus the added cost of the increased workforce. This type of increase could severely hamper the company’s growth strategy.

“The company’s 2017 renewal arrived. Remember, they had just changed carriers at the last renewal and were expecting a low renewal increase from their new insurance carrier. What they were not expecting, what they had not budgeted for was a 49% increase.”

When this business came to us, our first question was, “What is driving your increases?”

Until we had the answer to this question, we would not be able to determine:

  • How to structure coverage for this company.
  • If the current carrier can be salvaged (this is often recommended, as too much change sends the wrong message to employees) or what are other carriers may be willing to offer the company.
  • What type of employee education is applicable.
  • If wellness initiatives are needed.

The bottom-line is this: Any agent who interviews for this account and does not address the reason(s) for the high annual premium increases is simply prolonging this company’s pain. It is impossible to devise a plan to curb the increased health insurance cost without addressing what is causing the increased cost of the healthcare.