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Group Benefits

Companies typically offer group insurance to their employees on an insured basis with the objective of minimizing business risk for the employer and 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 contributed to escalating employee benefit costs on an insured basis:

  • Less competition due to consolidation in the industry.
  • Shareholders 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 insurers use are between 15–21%.
  • Incurred claims being used to calculate renewals — typically 4–5% higher than 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 have claims paid from this pool, along with 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 or trend factors over Statistics Canada 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 employees — and you'll receive access to online reporting and administration tools.

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A 30-minute consultation — at no cost — is often all it takes to identify meaningful gaps or opportunities in your current plan.

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