As companies around the world look to save as much money as possible on their operations, employers are carefully evaluating employee benefit plan costs.
Group insurance benefits are typically subject to an annual renewal process.
At renewal, benefit plan managers have an opportunity to ensure that their insurance carrier is effectively providing essential employee benefits as economically as possible.
A popular option for saving clients money at renewal is the Administrative Services Only (ASO) plan.
Group ASO Plan Defined
ASO is now one of the fastest growing types of employee benefit arrangements. Under an ASO plan, employers are responsible for directly funding all claims that their employees incur. Plus, employers pay a fixed fee for administrative services like claim payment and management reporting. An insurance company or other financial institution usually provides those administrative services, but doesn’t collect any premiums where no insurance risk has been underwritten.
Health and dental benefits are most commonly covered under ASO plans. Self-insuring short-term and long-term disability benefits requires that employers set aside reserves to ensure that future claim payments are made even if coverage terminates. Larger employers fund ASO disability plans.
Fast-Growing ASO Plans
For the year ending December 31, 2008, Canada’s Great West Life Assurance Company garnered US$1.9 billion in self-funded premium equivalents under ASO contracts, up 8% from $1.8 billion in 2007. In contrast, Manulife Financial reported a 25% decrease from more traditional group insurance products in 2008. Competitor Sun Life Financial had a 7% slide in premiums for its more conservative portfolio of group insurance clients.
Costs That ASO Benefits Save
Under traditional experience-rated group insurance, employers pay a group premium that includes charges for claims, reserves, inflation factors, administrative fees, risk management and profit. Also included are sales commissions. The insurance company calculates group renewal premiums, looking at each group’s claims experience history but also adding rate adjustments and assumptions to improve profitability for the block of business to which the employer belongs.
In contrast, an Administrative Services Only plan limits client funding to actual paid claims plus a fixed fee for administrative charges. An ASO client saves the following group insurance charges:
ASO Advantages Over Group Insurance Premium Renewals
The annual renewal negotiation for insured health and dental benefits is often painful, with the insurance company trying to win maximum rate gains at the expense of their clients. Tactics used include waiting until the last minute to force through excessive premium renewals before the client has a chance to respond intelligently.
Employers do have the option of taking their insured plans out to market for competitive bids, either directly or through a group benefits broker. But if repeated annually, employee benefits re-marketing can become expensive both in terms of time and money.
An ASO plan eliminates the need for the premium renewal process. With an ASO plan, the administrative services fee is fixed and charges are more directly linked to the actual claims that employees incur.
Claims Advantages Of ASO Benefits
Administrators provide their clients with detailed reports of claim payments, then help their clients focus on claims’ cost control strategies without having to worry about other insurance charges.
For example, an ASO plan enables the client to take away overused benefit components like anti-depression medication that might be standard coverage under an insurer’s package plan for companies of a certain size.
US Health Plans Involve Major Risks
Here’s an important note for American group policyholders contemplating a switch of their Major Medical plans to ASO.
Canadian provinces offer medical care. Thus, a major portion of the costs for highly expensive treatment like cancer chemotherapy is provided for under government plans. Therefore, Canadian companies are insulated from major medical costs should their employees require extensive surgery, transplants or other expensive treatment.
In contrast, an American company that self-insures the Major Medical benefit may have to pay millions of dollars for medical complications from a pregnancy especially if there are no limits on coverage.
Therefore, ASO plans in the U.S. usually are sold with stop-loss policies that require an insurance company to assume the risk when claims exceed a contractually specified dollar amount or percentage.
There are many different types of travel insurance policies. They cover the traveler for different lengths of time, for different areas of the world, and insure a bewildering a variety of different things. How can one sort out this maze?
Single Trip or Annual Policy?
Annual travel policies cover the traveler for every trip he or she takes in a year. Single trip policies are simply for one trip or holiday. For those who go away more than once a year, annual policies usually work out cheaper. When working this out, one needs to consider the possibility of weekends away as well as the main vacations. These all add up, and often the annual policy is worth having.
Europe or Worldwide Cover?
For those who are only taking a vacation in Europe it is cheaper not to get worldwide cover, and Europe-only insurance cover is significantly cheaper. However, if the traveler is going further afield, it is essential to be covered despite the cost, as in places like the USA medical expenses can be extremely high.
Specialist Policies or Activities
For those going away for long periods, such as a ‘gap year’ trip, it is probably essential to look for a specialist policy, since most annual insurance policies have a limit on the length of each trip, usually around 30 days
For travellers who plan to do ‘adventurous’ activities, such as skiing or hang gliding, a specialist insurance policy may be required. Some ordinary insurance companies do offer winter sports cover, but one may have to pay extra. For more extreme activities, it is worth checking if one can pay an extra premium to cover them, particularly if it is only for a short period of time. This is sometimes cheaper than an annual insurance policy with a specialist company.
Only Get the Cover Needed
Sometimes policies offer different amounts of cover. It is not worth paying for cover one does not need; for example, large amounts of baggage cover if the traveler is not taking away anything valuable. Sometimes it is cheaper to insure valuables along with one’s household insurance, so it is worth checking. Experts recommend £1 million of medical cover in Europe, or £2 million in the rest of the world. They also suggest personal liability cover of at least £1 million, £1,500 baggage cover, and £3,000 cancellation insurance. But a good rule of thumb is not to buy what is not required.
Checking to See if One is Already Covered
Some banks offer free travel insurance with certain accounts, so for those who have one of these, there is no point in paying twice so long as what one needs is actually covered. However, the travel accident insurance offered by some credit card companies only covers the individual in certain very specific circumstances, so one should not rely on it.
Finally, the individual should be upfront about any medical conditions or similar things, as otherwise the policy could be invalidated.
Once the traveler has adequate insurance cover, he or she can go on that planned holiday safely, knowing that if anything goes wrong at least there should not be an expensive bill to be paid. And this peace of mind is at least as important as the good feeling one gets after a restful and relaxing holiday.
Do you use vans or other vehicles as part of your business?
You do not have to run a huge multi-million pound business for fleet van insurance to be appropriate for you. Many insurers classify as few as two vans or trucks as a ‘fleet.’ Others will offer preferential rates and terms for anything over five to ten vans covered under one fleet van insurance policy.
Commercial vehicles are important company assets
Vans and trucks are vital components of many firms and are probably some of your most valuable company assets. This is why it is crucially important that they are fully protected. Many companies find that a fleet van or truck insurance policy is the best way to achieve this.
In the same way that your business can suffer if your workforce is absent through sickness, having your commercial vehicles off the road through theft or an accident can negatively affect your business. Can your business afford for its vans or other commercial vehicles to be off the road?
Fleet truck insurance is the perfect solution answer if you are a company with a number of vans or trucks. One fleet van insurance policy can cover your whole range of commercial vehicles, saving you both time and money. You only have to deal with one insurance company rather than having to correspond with dozens of different insurers for your various commercial vehicles.
Discounts and fleet van insurance cover
Fleet truck insurance policies will also save you money. Many companies offer discounts if you cover several vans, trucks or other commercial vehicles under one fleet van insurance policy. Discounts of 10% or more are not uncommon.
Whilst the cost of insurance is important, it is also vital that you consider what the various fleet van insurance policies cover. Many will include fire and theft, legal expenses and goods in transit. You may also benefit from a policy that offers a replacement vehicle if you rely on your vans being on the road at all times.
As anyone with a fleet of trucks will know, insuring your vehicles separately can be both costly and complicated. There is no guarantee that each of the policies provides the same cover as the others and it can take a huge amount of the time to review and renew each individual policy. With a fleet van or truck insurance policy, all your commercial vehicles are covered under one comprehensive policy, saving you both time and money.