Welcome to Part 3 of our Employee Benefits Marketing series – Checklist Items for doing it properly and the myths associated with each step.
The 10 Point Employee Benefits Marketing Checklist was created to equip advisors and employers with effective tools and information that go beyond marketing simply based on price. Our checklist is now available in the CloudAdvisors Solution Library, just search for “CloudAdvisors” or contact an employee benefit specialist who is #poweredbyCloudAdvisors to share with you.
Checklist #3: Disclosure of Quotation Assumptions
When an insurance provider releases a quote, there can be numerous assumptions made in order to quickly and competitively release the quote for proposal. Unfortunately, these assumptions are often stripped away by some brokers causing a miscommunication with the employer. This can lead to a difficult implementation or even an unanticipated liability.
If the quoter is awarded the bid and application process begins, assumptions will have to be challenged prior to reaching the effective date of the new policy. If any assumptions are substantially different, it could result in either a re-quote, a change of rate, or a withdrawal.
As an example, if an organization is experiencing high growth, rapid turnover, or a shift in demographics, it is the advisor’s role to disclose this information to the insurer. This helps prevent client assumptions in the proposal leading to uninformed decisions.
Here are some common assumptions made by a provider releasing a quote:
- Employee demographics remain relatively constant from quote to implementation
- All information supplied was accurate, complete and up to date
- Employees are Active at Work and there are no ineligible employees on the plan
- Employees on Disability have completed a Life Waiver of Premium
- There are no eligible employees not currently covered on mandatory plans.
- Significant and Recurring Pooled claims (above stop loss) have all been disclosed
- There is no significant loss in coverage or certain coverage will be grandfathered.
It becomes evident that each assumption carries a risk. Especially assuming all information was accurate and up to date; employers often provide incomplete data and only the current advisor has the most recent claim information. As a scenario, a broker may present a compelling quote without disclosing assumptions and convince an employer to proceed with changes or even terminate their existing policy in favour of a new application. With these significant details revealed it could materially change the quote and even prevent the decision to move forward.
As discussed in a previous checklist item, current coverage may not be accurately conveyed to a provider, resulting in a cost-saving quote that could leave members underinsured or with less coverage. While providers critically review this before releasing a quote, they are still limited by information received. This must be considered by the advisor to ensure the employer does not make an uninformed decision in search of quick savings.
Marketing Myth #3: Any Insurance Quote Can Become a Policy that Pay Claims
False. Insurance quotes may be “guaranteed for 90 days” but are subject to change. Changes can result from the confirmation of assumptions, or from details in the member enrollment forms in the final application. Following the sale of a quote there is still a risk that certain assumptions may cause issues after a policy is already in force.
With larger claims, fact-checking may uncover assumptions such as eligibility that were never met, which could cause a member issue, or a policy being voided entirely. These scenarios may involve fraud or simply a lack of detail when confirming quote evaluations, applications, and enrollments.
In order to avoid this, the first step is to follow the checklist and ensure that employers are not misled by attractive rates without validating all assumptions. The second step is to provide insurers with the information required to release a quote with as few assumptions as possible. This typically involves trusting your current advisor to go to market with complete information and not put multiple brokers, with limited data, in a race to collect quotes. At the end of the day, the employers can separately award quotes and proposals for advisory services without putting themselves at risk of an incomplete evaluation.