We offer both pooled and traditional options to our clients but this article will focus on pooled company health and dental plans.
In almost all cases, the annual rates or premiums in a pooled product will be lower compared to a traditional company benefits plan (standalone).
Pooling companies across Canada creates higher target loss ratios (break-evens) which reduces the annual cost. Target loss ratios are what the insurance companies use to determine annual rate changes of a company’s health and dental plan. As the number of participating groups or employees grow (pooling), the target loss ratio increases. A higher target loss ratio means that your group’s rates will trend lower annually – not just a one-time savings.
As an example, the break-even on the standalone plan may be 70%, whereas the identical coverage in a pooled product is 80%. This results in a 10% higher break-even just for being part of a larger pool. If the company health and dental usage is above the break-even, this group receives 10% savings on every renewal. For identical coverage and usage, the company’s health and dental rates will be 10% lower every year in a pooled plan compared to a standalone plan.
“Insurance pooling is a practice wherein a group of small firms join together to secure better insurance rates and coverage plans by virtue of their increased buying power as a block.” – www.inc.com
The increased buying power, decrease in underwriting expenses and sharing of risk allows us to offer our clients a better company health and dental product.