Self-funded benefits appealing approach

In some cases, employers can save money by self-insuring popular options
By Rachel von Sturmer
|Canadian HR Reporter|Last Updated: 01/10/2012

Traditionally, employers have purchased group benefits plans — including life, disability, health, travel, medical and dental coverage — through insurers. This arrangement made sense for potentially catastrophic claims, such as life insurance or disability insurance, where the large claim amounts necessitated insured coverage. However, large employers in particular began to question the value of insuring relatively predictable claim amounts for items such as dental checkups and routine medical exams.

Taking into account a plan’s claims and pricing changes year over year, it became apparent the premiums being paid to insure health and dental coverage were exceeding the paid-out claims — sometimes substantially.

As inflationary renewal trend factors, claims reserves, advisor commissions and other insurer administration fees were tallied, employers saw, in some cases, only 65 per cent to 75 per cent of each premium dollar paid was actually funding employee claims.