Benefit Renewals 101

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What goes into determining your group's renewal rates?

Maybe it's your first renewal, maybe it's your 10th. No matter how many renewals you've experienced, knowledge is power and knowing what goes into determining your renewal rates can save you from surprises down the road.

After purchasing a policy from an insurance carrier, this policy will be reviewed by the carrier and renewed every 12-24 months (depending on the cycle outlined in your policy contract). At this time the carrier will perform a renewal analysis on your policy to determine any rate changes required to continue offering your current group benefits plan.

In addition to annual inflation, factors that go into determining your renewal rates include:

  • Claims experience (frequency and value of past claims)
  • Credibility (size of group, length of time with current carrier)
  • Group demographics (age, gender, geographic area, occupation)
  • Target Loss Ratio (premiums received vs. claims paid)
  • Administrative costs (expenses for administering your plan)

First-year renewals are where you will typically see the most volatility in your rates. This is because when your initial rates were provided, the insurance company had to make somewhat of an educated guess as to what your group's claims would look like since they did not have previous claims experience to base them on.

When Humi receives a renewal from your carrier, our experienced benefits consultants will review the plan to ensure that it is priced correctly, and will negotiate on your behalf to ensure that any adjustments are appropriate for your group.

If the negotiated renewal is still too high to maintain, our consultants can review cost containment strategies with you to help reduce the impact.

Need to brush up on your insurance lingo? Check out our handy Benefits Glossary!

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