Council of Insurance Agents and Brokers’ Employee Benefits Market Survey
The Fall 2009 Employee Benefits Market Survey conducted by The Council of Insurance Agents & Brokers (CIAB) reflected an uptick in period-over-period medical premium rate increases for employers of all sizes with small accounts (accounts with 50 or fewer employees) once again incurring the largest increases. As one benefits consultant in the Northeast commented: “small group accounts are receiving excessive rate increases. The carriers aren’t negotiating off the renewals as they have in the past.”
The healthcare reform debate continues to be a point of unease for most of the surveyed brokers as “eighty-two percent of respondent brokers said they are very concerned the healthcare reform will negatively impact group benefit revenue, and 80% said they feel a public plan open to all will have the greatest impact on their business.” The need for change is abundantly evident given that continuous double digit rate increases are not indefinitely sustainable; however, the destruction of the private health insurance distribution model is feared collateral damage under the current proposals. Any reform will likely have the greatest impact on brokers serving the small accounts market. Diverse value added service capabilities continue to differentiate the average commodity based benefits broker from those well positioned to weather the storm of healthcare reform.
Of the brokers who responded to the CIAB survey, 91% reported that rates had increased for small accounts (50 or fewer employees) while 94% of respondent brokers reported rate increases in medium sized accounts (51-500 employees).
The following chart illustrates annualized rate changes for the various employer group categories.
Figure 1 (click to enlarge)
Source: The Council of Insurance Agents & Brokers Employee Benefits Market Survey
Employers of all sizes continue to shift costs to employees by means of higher deductibles and co-pays, by reducing the overall levels of benefits provided and by increasing the employee share of monthly base premium costs. More than 50% of respondent brokers reported that greater than half of their clients have elected to have employees share in more of the premium costs.
Healthcare reform is not expected to have a significant impact on rising healthcare insurance premiums in the near-term. Premium rates are expected to reflect continued steady increases in the low to mid teens through 2010 and well into 2011.
As reported by the CIAB survey, group life rates, as illustrated below, were unchanged or experienced a slight downtick during the second part of 2009.
Figure 2 (click to enlarge)
Source: The Council of Insurance Agents & Brokers Employee Benefits Market Survey
GroupGroup life insurance rates are expected to be quite stable over the near and mid-term with minimal period over period upticks and downticks for all size accounts.
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