Companies typically offer group insurance to their employees on an insured basis with the objective of:

 

• Minimizing business risk for the employer

• Stabilizing their benefit costs

 
In today’s business environment, it is becoming increasingly difficult for companies to avoid increasing costs associated with employee benefits provided through insurance companies. Typically, the services provided are; life insurance, accidental death and dismemberment, dependent life insurance, health, dental, weekly indemnity, long-term disability, and critical illness insurance.
 
The following factors have attributed to escalating employee benefit costs on an insured basis:
 

• Less competition due to consolidation in the industry.

• Shareholders are mandating a 15% ROI to insurance companies.

• The less profitable lines of business have to increase costs. Traditionally benefit lines have operated on low margins, and we see this currently disappearing.

• Drug costs are rising. The annual inflation (Trend) factors that insurers utilize are between 15 – 21%.

• Incurred claims being used to calculate renewals. Typically this is 4-5% higher than the actual paid claims.

• A utilization factor of approximately 2.5% is then factored into the equation.

 
Option: Self Insured Benefits Program
 
The objective of self-insurance is to reduce costs to an employer for those benefits that have predictable experience. Extended health, dental, and weekly indemnity are the three benefits that, for the most part, are predictable. Therefore self-insurance is only used for these benefits, with the other core benefits provided on an insured basis.
 
Self-insurance (also known as self-funding) is becoming more popular for companies with more than 65 employees. Historically this area of benefits was the domain of large multi-national employers. However, with the evolution of Stop Loss Insurance, smaller companies have been able to self insure while still maintaining protection against any catastrophic loss. You can use Self-funding for health benefits, dental benefits, and weekly indemnity.
 
Self-insurance allows the employer to set aside monthly contributions and accordingly have claims paid from this pool and the administrative expenses. Our administration charges are dramatically lower than insurance companies as we charge these expenses on a paid basis rather than an incurred basis. We also do not factor in utilization factors or trend factors over the Stats Can figures. All in all, this enables an employer to provide employee benefits while controlling the exact costs.
 
Through A.M.Burgoyne Insurance Associates Inc. and our Third-Party Administrator, we can offer self-insurance and pooled insured coverage without placing more risk onto the employer. We maintain relationships with all major insurance companies and utilize them for life insurance, AD&D, and other pooled benefits. The transition to this type of plan is painless and seamless to the employees. You will receive access to online reporting and administration tools. 

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