Page 8 - Jan-Feb 2021 Reporter - web optimized

Insurance UPDATE

5 FACTORS AFFECTING BENEFITS PREMIUMS

AND HOW THEY WILL AFFECT YOUR RENEWALS

IN 2021

Contributed by:
Jimmy Dang
hub international Wsponsors often take data from the previous 3. Health and dental trends: insurance
hen it comes to benefits renewals, plan
companies set a premium high enough
ontario limited year to help them plan and budget. This can be to cover the cost of claims and expenses
a great way to help determine benefits costs. for the next year. They consider trends
And between march and may of 2020, there was such as inflation, expected usage,
a dramatic dip in paramedical and dental claims, change in demographics and the cost
when covid-19 shut down medical offices across of new products and services. It’s likely
canada. So it’s natural that sponsors might that higher costs due to these factors
expect rates to decrease for 2021. outweigh cost reductions due to a
However, the medical shutdown was only decrease in utilization.
one part of the equation, and it’s unlikely 4. Limited experience: insurers may apply
premiums will fall in 2021 as a result. only limited credibility to smaller
"Although it Understanding how benefits premiums organizations given the high volatility of
are calculated can help organizations claims year-over-year. In conjunction with
may seem understand and plan effectively. the experience from an insurer’s overall
that pandemic If your organization doesn’t business, the factors mentioned above
budget enough for coverage and can’t will help determine the remainder of the
shutdowns will find additional funds to absorb the cost.
lead to lower difference, you may instead wind up 5. Self-insured coverage: if your plan is self-
cutting back on other benefits. insured, your advisor may recommend
medical and Here are five factors that may result excluding the months of lockdown from
dental premiums in an increase in benefits renewal 2020 data when planning for 2021. This
rates:
minimizes the likelihood of putting your
in 2021, it's plan behind before you even start.
1. Claims paid: even though dental
unlikely to be and paramedical offices were closed Preparing a budget is critical to future
true for most for several months, it did not mean the planning. There are many factors that contribute
number of claims submitted over the to your future premium rate, not just the number
businesses." entire year decreased. Many providers, of claims. When planning for medical and dental
such as mental health professionals, renewals, set aside as much as you did in 2020, or
pivoted to virtual models, and other even more. Reach out to your benefits consultant
categories like pharmaceutical coverage or advisor to confirm whether your expectations
may not have been particularly affected. are reasonable.
2. Premiums paid: many, if not most, Hub international’s team of brokers has
insurers reduced premiums due to the extensive experience in designing the full
spring lockdown. Depending on the range of employee benefit programs and can
benefit, some reductions were as high as help you gather the data you need to navigate
70%. As a result, your organization may the benefits renewal process efficiently and
have already fully benefited from any dips effectively.
in claims due to the shut down.

8 LBMAO Reporter - January-February 2021 www.lbmao.on.ca