Four thousand, five hundred. That’s roughly the number of small group renewals that I have reviewed, priced, negotiated (and re-negotiated) throughout my career in the group insurance industry. And you know what? Renewals aren’t fun. Not for the insurance company representative, not for the advisor, and especially not for the client – at least most of the time.
Prior to joining People Corporation in 2018 I knew very little about Sirius Benefits. In a galaxy full of small group solutions, I thought they were just another star – except they’re not – they’re the brightest star!
The notion of a pooled product is not new. It’s when a group of companies come together under one master policy and support each other through high and low claiming years to keep premiums stable, predictable, and affordable over the long-term. Instead of the policyholders being rated independently, they are rated as part of a larger group that includes thousands of plan members.
Power in numbers
So why is this advantageous to the small business owner? Scale.
The challenge that smaller companies face when being independently rated is that their claims experience tends to fluctuate dramatically from year to year, which causes a renewal rollercoaster effect which is impossible to budget for. Sure, insurance companies try to protect fluctuation by using a blended rating approach, but with manual rates increasing by 15%-17% annually on Health, and 6%-12% annually on Dental, we’re seeing double digit increases routinely, regardless of how good (or bad) the claims experience is.
What Sirius Benefits, and other pooled programs do, is negotiate the renewal with the insurance company at the block level, rather than at the group level. Since the block is so big, the claims experience is extremely reliable. Even if some members have exceptionally high claims, they are offset by members with exceptionally low claims. As a result, Sirius Benefits is able to provide a stable rate environment that provides small business owners with peace of mind when budgeting for one of their largest expenses. To put this in perspective, since People Corporation acquired Sirius Benefits in 2017, the block has renewed at an average of 5.1% in Ontario (5.5% in 2017, 5.4% in 2018, and 4.4% in 2019). And, they have accomplished this while embedding some incredible value-add products and services.
So, why do I feel that the Sirius Benefits pooled product is the best small group solution in the industry when there are a myriad of other products to choose from? The answer is simple; value. There’s value to the advisor, the plan sponsor, and the plan member.
In part two of the series, I will explain how advisors can leverage the Sirius Benefits small group pool to offer a differentiated solution to their clients and to attract new opportunities that they may not have known existed.