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A new client received a renewal from their life and disability carrier offering that the plans’ current rates would be retained for the next two years. The client was pleased because these benefits were very competitively priced three years earlier when their previous advisor had last solicited competitive bids. Furthermore, the carrier had provided excellent service during the three years they had managed the coverage. However, during that 3 year period, the client had sold a division and done further restructuring of its workforce. As a result, the renewal might not reflect today’s market.
Aware that the client had sold a business unit and had grown in other areas during the intervening years, Summit suggested seeking competitive bids from a large sampling of carriers. Markets can change dramatically over a relatively short period of time. In addition, insurance carriers often change their underwriting philosophies, sometimes resulting in a willingness to offer extremely lucrative packages to businesses they had not found attractive previously. We managed a bid process involving twenty potential vendors (including working with the current carrier to make sure they were given every opportunity to revise their offer to make it more attractive). We kept the client in the loop during the process so they would have full knowledge of what we were able to do on their behalf. At the end of the process, negotiations can become quite intense, not only on price but in making sure the client receives the best value for their benefit dollar. After the final bids were received and all negotiations ended, the bottom line revealed a staggering price difference for the same plan design among equally strong carriers. The incumbent carrier’s “current rate renewal” was slated to cost $186,000 annually (which the client, as noted, was happy about). In the end, however, the incumbent carrier’s final renewal offer came in at $106,000 - but the client changed carriers, resulting in a new annual premium cost of $76,000.
Pricing is important, especially with employers facing strong upward pressure in their health care plan costs, so it is important to recognize markets and opportunities for improvement in pricing. It is equally important to make sure clients receive value for their benefit outlays, in terms of policy provisions, service and proper claims administration. At Summit we recognize the need to balance cost and benefits, all to the advantage of our clients.
The preceding are hypothetical case studies and are for illustrative purposes only. Actual performance and results will vary. These studies do not represent actual clients but a hypothetical composite of various client experiences and issues. Any resemblance to actual people or situations is purely coincidental.