Why The Lowest Priced Insurance Plan May Not Be Your Best Option

Do you recommend price be the sole consideration for the products you manufacture? Probably not. So why do you shop for your company's health insurance and benefits plan based on price alone?

It’s 90 days before your health plan’s renewal date. Your benefits broker calls, asking for your current census, rates, benefits and renewal information to put together this year’s spreadsheet of insurance carrier price options, and secure your business for another year. In fact, four other brokerages offer to do the same, each saying they’ll be the one to work hardest on your manufacturing firm’s behalf. Each offers to provide a certain combination of services for free, all knowing you’re most likely to choose the lowest price plan.

But, as a manufacturer, do you want your clients to consider your products based on price alone? How has choosing the lowest-priced insurance plan helped control your costs over the years?

No Insurance Quotes

Giving employee benefit plans the commodity treatment has resulted in decades of price hikes in the form of rising premiums in an increasingly opaque health care system.

If you send out those five aforementioned brokers with the same data, they all will come back with the same proposals. The worst part of it is, they are going to spend very little time trying to figure out what is best for your manufacturing firm, and they will spend the majority of their time trying to figure out how they can beat all of the other brokers that are competing for your business.

And, when everyone comes back in with the same proposals from the same carriers, they're each going tell you, "We've been in business since 1902. We've got really strong carrier relationships and our service is second to none."

Knowing that’s not enough to stand out, they’ll then ask, “How much can we do for you for free?” They’ll offer up COBRA administration. Benefits administration. Enrollment kits. Compliance services. You name it.

A Real Solution to Rising Health Care Costs

You have to be much more strategic than that to truly tackle health plan costs and make a difference for manufacturers and their employees. This is why we no longer quote insurance to earn new clients. Instead, we’ve made a strategic pivot to managing the health care supply chain and taking true control of the health plan.

Brokers have failed you by repeatedly bringing insurance solutions to a supply chain problem. If all you're trying to do is buy a product and get the cheapest possible price for that product year in and year out, we can give you our renewal timeline and our internal process. You could save the commissions you’re currently paying your broker and have someone on your team haggle with the insurance carriers.

Variable Expense

Your costs have gone up the last 20, 30, 40 years and you’re sick of it. According to independent actuarial and health care consulting firm Milliman, no matter what type of funding or what type of plan design you have, 20% of the plan cost is a fixed expense. The other 80% of the expense is variable.

Here’s what matters:

• What kind of services are your employees getting?
• Where are those services being performed?
• What kind of claims are you amassing?

Too many brokerages spend too much time getting minor discounts from the 20% of fixed expenses, such as administration fees or stop loss premiums, while ignoring the other 80% of variable costs altogether.

The quoting process is still part of the DCW Group equation; we still have to help you find and place insurance. But first, we see if you're philosophically aligned with our team as to how we view the problem of escalating benefits costs. Speak with our references who have already worked with us. As you’ll see, the annual renewal process is not the problem, and it's also not the solution.