Past Issues
-October 2006Contact us:
Ed Bates
952.944.5044
Mary Bates
952.942.8355
Jereme Bates
952.944.2919
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"Obstacles are those frightfull things you see when you take your eyes off your goal."
- Henry Ford
Point of Interest - Rising Insurance Costs
Written by Ed Bates
Why Is the Cost of your Business Insurance Going Up? In order to answer that question, one must first know what are the major challenges that the insurance companies themselves face. Most insured’s do not realize that their insurance company is first and foremost an investment organization. Essentially, they take on risk of others in order to collect premium. Those dollars are in turn invested in large volumes into the investment markets in order to add to the company’s ability to generate profits. Historically property and liability companies have lost money on actual claims to premium. However, as an institutional investor, they have the opportunity to significantly change that picture with favorable investments. These companies did remarkably well during the 1990’s with historic return on investment. Many foreign insurance companies underwriting in the United States not only invested, but also went strong in equities due to their great return, neglecting to balance their portfolios for harder times. These good times all came to a screeching halt in early 2000 as the economy slipped into a somewhat anticipated recession. Many stocks had been over valued and the recession required investor’s to take a close look where their money was located. This caused a significant bear market, which we have been in since that time. To add to these insurance companies woes, September 11 caused not only the U.S. economy to stumble further, but the insurance and reinsurance losses were enormous. The final results have been little if any profit from either, insurance underwriting or investments, causing a decrease in insurance company surpluses thus diminished ratings. This all equates to much higher insurance premiums for the consumer. W hen might we see an improvement in this situation? Improvement will not come until the economy improves. The economy continues to stumble due to disappointing industrial profits and the uncertainty in international affairs. Until then, plan on increasing costs and on working with those insurance agencies like Bates & Associates that have the insurance markets available to them that can assist you during tougher times.
Written by Mary Bates
What is causing health insurance to soar? We have all been hearing about high consumer usage, sophisticated technology that is groundbreaking but pricey, expensive drugs with high utilization, and longer life spans. The fact is, 20% of the patients drive 80% of costs. Costs for conditions like diabetes, heart disease, and asthma account for more than 75% of health care costs. Heart disease and diabetes care accounted for $300 billion. The conclusion is that people with chronic diseases are on the rise and that is a major contributor to this increase in health care costs. The insurance carriers are being proactive and offering health management programs. Take advantage of these options and encourage your employees to participate. HealthPartners and Blue Cross have launched major care networks to help assess, monitor, and direct clients to appropriate care and support. HealthPartners will even offer a slight discount at renewal for companies that participate by taking a health assessment. Medica and Preferred One also offer “on line” health improvement tips and hotline service. Take advantage of these benefits and help to get control of these staggering figures. Early intervention and education can prevent millions of dollars of future catastrophic cost events.
Written by Jereme Bates
Among other things, Bates & Associates specializes in helping employers save money on their group health insurance. “How do we do that,” you may ask? I am going to briefly explain that and how it may be a money saving opportunity for you.
Oftentimes during my conversations with the business community, I hear employers indicate that they are not interested in marketing their health insurance because they reviewed options five, six or maybe even more years ago. They don’t seem to be interested in going through the process. We find this somewhat perplexing because the average company should be reviewing cost options every 2 to 3 years. Between plan design alternatives and current health underwriting or fresh underwriting, we have been able to save companies up to thirty thousand dollars in annual premium. You might ask, “what do you mean by fresh health underwriting and plan design?”
Fresh underwriting is simply the process where an insurance company or HMO can assess the current health status of your entire company through the completion of health applications. Have you ever received an increase in your health premiums due to a complicated illness. That situation may no longer be with your company., and one would think therefore that your existing insurance com-pany or HMO would adjust your rates accordingly. Most likely they will not, even if you point that fact out to them. With an up to date report on your company’s health status, another insurance company or HMO will base your future pricing on that report, not on past health issues. Thus you save health dollars.
The most overlooked reason for taking your company to the market is because your insurance company or HM O might not have the lowest “filed rates”. For employers with 50 or less employees, filed rates are those rates filed with the State of Minnesota which then can be increased or decreased a maximum of 25%. This means that if you are rated at the very top because of health issues with one particular HMO, it does not mean that another HMO’s highest rates are the same. If you are cost conscience, then it may be important to search for the HMO with the lowest filed rates. Your current HMO might have been the most competitive company three years ago, but a lot can change in those three years.
Always remember that as a Bates & Associates client, these money saving measures are free for the asking. Please contact me for further clarification or any other questions you may have.