When Does it Make Sense to Take Your Benefit Plan to Market?

We like it when an employer and their employees are happy with their selected benefit provider, but satisfaction is usually the outcome of many factors. Rates need to be priced fairly, claims should be paid properly and in a timely fashion, administration should be easy and run smoothly, mistakes (those rare times that they happen) need to be fixed quickly and problems should be resolved without hassle.

When is it time to review your benefits plan?

When a benefit plan is running smoothly it’s because of balance – the needs and expectations of employer, employees, advisor, and service provider are all being met. It works this way most of the time, and we like it that way. But there are times when a situation, circumstances, or even an opportunity, arises which makes it necessary to consider alternatives to the current status quo.

Here are the most common reasons why we recommend that an employer should complete a market review:

1. Due Diligence  

Even when everybody is happy, and the current benefit program is meeting the needs of the employer and employees, there still comes a time when we need to explore the market. It’s considered prudent to go to market every 3-5 years just to ensure your rates are in-line with where the market is at. It also provides another opportunity (aside from the annual plan renewal) to review your plan design in depth, ensuring everything is either still the right fit or making plan design changes if appropriate.  

(Related Post: Are You Ready for Your Benefits Plan Renewal?)

2. Your Company Has Changed

A company can change in many ways – through growth, with new divisions or the addition of new locations, mergers, or corporate acquisitions. These often change the employee demographics and composition of the company. If there’s a large increase or decrease in the number of eligible employees for benefits, then it’s highly likely the current plan no longer fits with the current company demographics. And at this point it makes sense to explore the market.

3. Your Company Does Not Have a Current Plan

Perhaps a company is considering benefits for the first time, trying to get an estimate of costs for budgetary reasons. Similarly, it’s possible a company may come back into the market after winding up a previous plan or moving to an association type of plan.

4. Poor Service

Nobody likes to receive bad service or feel like they’ve been treated unfairly - this is true across all industries. Our goal is to provide excellent customer service, and we expect the same from the insurers we work with. It’s important to distinguish the difference between a poor experience (an isolated incident) and poor service over a prolonged period. A longer duration implies that problems are unresolvable or have been recurring enough to disrupt and impede a benefit plan from running properly. 

It’s interesting to note that we’ve worked with employers where personnel might have biases against certain insurers because of previous poor experiences. It’s true that some service providers have gone through rough patches – examples of poor service tend to be centered around times when a new website or back office system was launching, or there was some sort of corporate realignment (mergers between companies or even service departments) that disrupted normal service levels. But it’s also possible that some of these poor service experiences were the result of a previous broker not doing their job and merely blaming the insurance company for their own shortcomings.

5. Price

No, we are not talking about shopping for a deal and looking for a low-cost provider. “Getting the best deal” has never been a viable long-term strategy in building a benefit plan. We’re talking about a situation where we determine that the current rates do not appear to reflect the actual claims experience and/or company demographics. Taking the plan to market will confirm exactly where current rates stack up.  

6. Capabilities and Limitations

If the current insurer cannot administer specific plan design or program changes, it becomes necessary to see what another company is capable of. Perhaps a company is looking to add a specialty product – an Employee Assistance Plan, or a customized disability program that the current provider does not offer. Or perhaps they do, but another service provider offers a superior program.

These are some of the examples of when it makes sense for a company to take a benefit plan to market. Once a market survey has been completed on your behalf, it’s imperative that we review all options, assess what course of action makes the most sense for your organization, and make a decision based on all factors.

Why Communication is Essential

If the outcome is a decision to change the plan design, or to change providers, it’s important that you communicate this in the best way possible to your employees.

Change can lead to confusion and uncertainty when it’s not facilitated properly, so don’t let it happen. Instead, use change as an opportunity to reinforce the highlights of your benefit plan and the value you feel it plays as part of your overall compensation strategy. It’s a chance to remind your employees that they’re valued, and this can go a long way with retaining your talent.

Final Thoughts

Keeping employees happy and healthy is an ongoing, dynamic process. Evaluating your benefits plan periodically can help make sure you’re providing the best, most relevant coverage to your employees. The examples we’ve listed above will help you know if now is the right time to make a change.

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