Why The Chambers Plan Is Your Best Option for Group Benefits for Firms Under 100 Employees
Recently there has been a great deal of debate about value in the group insurance industry. For year’s carriers have competed for business almost exclusively using price as their sole marketing mechanism. In fact, it is not uncommon for a carrier to price health and dental premiums below a company’s previous year’s actual claims. For some time, the exception to that method has been the Chambers of Commerce Group Insurance Plan®.
What makes the Chambers Plan Group Benefits different you might ask? The plan was originally designed for Chambers of Commerce and Board of Trade members. It is operated as a not-for- profit basis and administered by a board of directors from both the local chamber and local business community. When the plan was established many group benefit insurers did not insure firms with under 10 employees. Consequently it filled a need for small businesses when they weren’t recognized as a large part of the economy.
Over time it has developed into a robust benefits program with customizable options offering all forms of traditional benefits coverage. It provides all certificate holders, including those waiving coverage, with access to the Best Doctors program while providing additional options for employees with complex health issues. It also provides business owners with the Business Assistance Service(BAS), which provides businesses with free access to additional accounting, legal and human resource assistance.
The Chambers Plan Group Benefits mission statement is to provide small and medium sized businesses with access to sustainable and renewable employee benefits. In addition, the Chambers Plan has also developed an exclusive Advisor Network which advises on practical plan designs created to fit a company’s budget with predict renewal costs.
How does the Chambers Plan Group Benefits maintain stability in a market where buying business is the main factor? The plan has the largest pool of its kind in the country with over 30,000 firms participating. This allows firms with less than 10 employees to select from several fully pooled options. This means all benefits, including health and dental, are pooled for renewal. Each year these firms renew based on sustaining the pool, and as a not-for-profit negotiate for the best possible terms without the pressure of profitability.
The Chambers Plan Group Benefits provides small and medium sized firms with stable, predictable renewals. In most of the market a smaller firm with 1 or 2 higher claimers will be rated for their usage and receive higher renewals as the carrier tries to remain profitable on the group. There are some safety nets with carriers such as credibility ratings and stop loss protection but rest assured if you claim more than average you will pay substantially more than average.
The Chambers Plan Group Benefits has also created a hybrid type of renewal system. Firms with 3-9 or 10+ employees have the option of participating in a partially pooled benefit plan. The design of this plan allows for a rating based on usage, it does not assign all of a firms claims into the renewal, instead it blends their usage with the pool. This hybrid type of renewal system provides firms with more of a cushion should they experience a year with underperforming claims. Firms with a positive experience automatically receive a reduction in rates without having to re-negotiate with the carrier.
Another advantage of using The Chambers Plan Group Benefits is its ability to manage health care drug programs and limit the exposure to increasing drug costs. With several capped options the plan’s advisors are able to guide businesses towards a deductible level based on their income that will work best with provincial background plans such as the Ontario Trillium program.
By not buying business the Chambers Plan Group Benefits also does not waste resources on lost leaders. Carriers doing this have to make up ground on good claiming clients to offset losses on those where they have bought business at unsustainable renewal levels. This allows the plan to have extremely competitive break evens for firms up to 100 employees. A break even is the point where carrier’s profitability level is with a client. In plain English, it is the ratio of claims to premium.
Another layer of overhead is also reduced in reserves. As a not for profit the Chambers Plan Group Benefits has its own reserves. Carriers typically collect reserves, known as IBNR’s, which are “incurred but not reported” monies they set aside to pay claims either when you run a loss or leave the carrier. This additional 5%-10% is kept by the insurer for use at their discretion. It is largely a reduction in your break even level as today with electronic claim submissions there is very few un-reported claims to pay. By not collecting this piece the Chambers Plan competes well against competitors in the marketplace.
For those carriers that do buy business when your renewal comes in at a high level and you have to renew by going back to the market, eventually the same market that will discount to win business will consider you to be unstable for going to the market too often and decline to quote, limiting your options when the higher renewal comes in. Certainly hypocritical and unfair, but the way the market works.
If you’re looking for the lowest rates in the marketplace for your benefits plan the Chambers Plan Group Benefits is not the place to go. If your business is looking for predictable, long term costs with low volatility, while still maintaining competitive rates it’s worth considering the Chambers Plan Group Benefits. With constantly evolving new options and changes to adapt to the marketplace it remains a solid option for your business.