Now is the time when many schools are looking to evaluate their group insurance options. There is often a lot of confusion about the process and what you actually need to provide to get a new quote. You may ask yourself, why are they asking for my current brochure? Why do they need to know the cost of my plan, shouldn’t they be able to tell me what the price is? Or, you may be wondering why they are requesting a copy of your group’s claim history and if this is necessary information to share. In this blog, we hope to provide some clarity and transparency about what information is useful, why it is requested, and how it will impact the proposal you receive.
Whether you are speaking directly with the insurance company or a broker, you will likely be asked many questions after expressing interest in getting an insurance plan quote. Commonly asked questions include:
- How many students do you have?
- What are their ages?
- What is the average length of stay?
- What type of visas are they on?
- Can you provide your insurance brochure and current price?
- Proposed plan design if different from in-place plan
- What is your renewal rate?
- Can you provide your claims history for the last 3 years?
- Will your plan be mandated? If there is a waiver, who can waive and under what circumstances?
This may seem like a lot of questions, but each of these questions are important from an underwriter’s perspective to appropriately evaluate a plan and provide a realistic price.
As you can imagine, the age, length of coverage, and number of students you have on your plan can all impact the rate of your plan. Some insurance carriers may even ask if you know the gender breakdown of students and how many dependents (if your group plan covers dependents) you will have on your plan.
Because of the impact of demographics, an insurance company may ask for a census of your currently enrolled students to get an idea of the overall age distribution of your student population. Let’s examine each one individually.
Not surprisingly, students who are older tend to have more medical issues and thus a higher utilization compared to younger students. Because of this, the older your student or scholar population, the more expensive your insurance plan will be.
Length of Coverage
Students who are on the insurance plan for a short time will typically have less claims than if they are on the plan for multiple years. Most international students are typically in the US for 2-6 years, and thus most international student insurance plans may already account for this.
Number of Students
The larger your student body, the more premium will be generated to cover claims, and it would be more likely that if there is a high-dollar claim, your plan will still have a solid loss ratio (meaning that the generated premium will be able to cover the cost of the claims).
Many group insurance plans are not extending coverage to spouses or children, and a big reason for this is because of how expensive it can be to add them. If family coverage is provided on the group plan, there is typically a separate rate that will apply to them (and it is oftentimes more expensive).
Other questions are often asked about where students are from, where they need coverage, and the type of visas they are on. This is often asked for two reasons. The first is to confirm eligibility of all participants. Especially when you are evaluating an international student or study abroad plan, the carrier will need to confirm that students are outside their home country and may also need to verify that they are traveling for educational purposes.
Secondly, the insurance company will also need to know where students will be traveling to. Costs across the United States and abroad vary quite extensively, so many underwriters will want to know the cost of medical treatment in that area to correctly rate the plan.
While you might think that the demographic information is enough to get a quote, additional documentation can help the underwriter both design the plan more appropriately based on your needs as well as guide the correct pricing of your plan.
While not always required, your existing group brochure is a good guide to see what your current benefits are, and for them to see what the pricing was based on. It can also be a good place to start as you can take what you have and make further modifications. If there is no existing group plan in place, you may be asked specific benefit questions so that the insurance proposal will reflect the benefits you and your students need.
Current Pricing, Renewal Rate, and Claims History
Stability is the key to a successful insurance plan, no one wants a cheap plan only to find out that at renewal, the rate will jump dramatically. This is why current pricing is requested, why the renewal rate is helpful, and why your claims history is requested. These can help dictate a trend, and more than that, it can also help reduce your rate.
Example. Let’s suppose you have an older population of students that need insurance coverage. Based on their age, you may get a high rate. But, let’s say that you have had very little claims over the past few years. In this case, the insurance carrier may be able to offer you a more competitive rate based on your claims history.
And why 3 years of claims? Three years can help determine a trend and will help to offset any outliers that you may have had.
Underwriters use all of this information to generate a competitive quote. If you do not share this information, then the underwriter will typically use their existing book of business to determine what the rate should be, and will make any necessary adjustments at the time of renewal. Depending on the underwriter, this will typically be a more conservative approach and can mean a higher price than what you would have had if more information was provided. The alternative can mean that you get a low price but that your rate will have to be adjusted at renewal, and thus you might have an unexpected rate increase at renewal.
The final piece to getting a quote is how your plan will be administered. Many underwriters will want to know whether everyone will be required to purchase the plan, or if students will be able to waive and purchase alternative coverage. If they are able to waive, they will want to know the circumstances in which a student can waive.
The reason for this has to do with adverse selection. Oftentimes, school insurance plans are more comprehensive than what a student would purchase individually. If a student has the option to waive, the market has found that healthier students may choose to opt out of the school’s insurance plan and buy individually since they think they are healthy and may not need to use the insurance. Those who choose to stay on the school’s insurance plan tend to need a more comprehensive insurance plan for medical care.
Because of this, having a mandated group plan helps to reduce adverse selection and provide a more stabilized insurance plan, which could result in a better rate on the plan.
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Tags: claims history, dependents, group insurance, group insurance plans, group quote, insurance proposal, insurance quote, International students, school insurance plans, student population, study abroad