Past Issues
-October 2006Contact us:
Ed Bates
952.944.5044
Mary Bates
952.942.8355
Jereme Bates
952.944.2919
Did you know?
Direct sunlight first thing in the morning can naturally assist our body’s transition to day light savings. Avoid extra stimulants and understand we are changing more than just our clocks.
-WebMD
Quarterly Quote
Ability is what you’re capable of doing. Motivation determines what you do. Attitude determines how well you do it.
-Lou Holtz
Bates Insurance and Financial Planning
Written by Ed Bates
Adding Financial Planning services to our group has always been an objective of mine, but it seems demand has moved things along faster than anticipated. Over the past several months, we have had numerous requests from our clients to assist them with corporate retirement accounts, buy-sell agreements, key person life insurance and more. Our corporate mission has always been to meet the needs of our clients to the best of our ability therefore we have asked Peter Thoresen to join us in these matters. Not only does Pete hold a NASD Series 7 and Series 66 license, but he is contracted with Focus Financial Network in order to operate in the heavily regulated world or financial services. Does it surprise you that as family owned business, that Pete is also part of that picture (Mary’s brother)? I have always felt that family would have our company’s and clients’ best interest at heart, and will continue to build our future organization based on that philosophy.
Pete is a graduate of the University of Minnesota. He and his wife Jean and his two daughters, Natalie and Katelyn, live in Rogers Minnesota where they are active in their school, church and community life.
In our next issues, we will offer you a message from Pete. He will expound more on the many services available to you as a client, which includes an outstanding educational program on asset management. In the meantime, should you have a need, whether personal or corporate, or would like to look at options to an existing program, please let us know.
Commercial Insurance Opportunities
Written by Jereme Bates
The past year and a half has presented some major changes for the Bates Insurance Group. In that time, we have changed our names, expanded our services offerings to include personal home and automobile coverage, along with commercial insurance. In addition, we moved office locations, expanded our website, changed our marketing efforts and have further committed ourselves to client service and savings. And now we are offering financial planning services. Wow…please allow me a moment to catch my breath!
With all this, I wanted to take a brief moment to focus you on our commercial insurance services, especially if you haven’t marketed this coverage recently. Fort the past year, we have seen what is termed as a “softening marketing”. A soft market is an insurance company’s greater desire to write your business, creating a more competitive market. Insurance companies, in essence, are investment organizations, investing premiums into the stock market and other investment vehicles. This is what brings balance to their equation of income versus expense. In the past couple of years, we have seen more stability within the stock market and this presents an opportunity for insurance organizations to invest premium dollars with more return. This allows them to take more risk as corporate profits increase.
So what does this all mean for you as an insurance consumer? It means that if you have good claims history, it is time to take a look at saving money. These insurance companies are anxious to look at good commercial business. Many of our clients have heard us discuss the need to market your health insurance to take advantage of “fresh underwriting”. That, along with plan design changes, in how you save money in the health insurance arena. Well during a “soft commercial market”, the same is true. If you aren’t already a Bates Insurance Group commercial insurance client, I strongly encourage you to give us an opportunity to earn your business. We have saved many of our clients significant dollars and we feel confident that we can do the same for you…
Written by Mary Bates
“Adverse Selection” is one of those insurance terms that you may or may not have heard of, or even understand if you have, but it is definitely something you need to know more about. In the journals of Life/Health 101, adverse selection is defined as “when an insurance company has selected more poor risks than good risks”. From the insurance company’s point of view, for them to financially make out on a health insurance risk, they need to have as many healthy people (low users) in the group, as less healthy (high users). If only the sick join, or remain, it becomes a challenge to keep premium dollars in line with claim costs. When claim costs exceed premium, the risk assessment of your group goes up and your premiums go up as well. Thus, the adverse selection cycle begins. This cycle continues to increase premium. The healthy people then pay more which causes them to seek other alternatives, which may even include going without coverage.
Employers today are exposing employees to more and more cost sharing to offset the cost of this benefit. For employees, this comes in two forms; sharing in the actual cost of medical expenses through deductibles, co-pays and coinsurance or through paying some share of the monthly premium cost. Employees tend to “do the math” when it comes to paying part of the monthly premium. “Doing the math” is when an employee calculates what their share of the cost is, versus the return in benefit. For low users or healthy employees, that cost sharing can’t be too high. On the other hand, those same people might not balk at higher deductibles because they aren’t using the health care system as much. When they do the math, and conclude your premium costs are too much, you lose what we at Bates Insurance Group as “healthy premium”. At the same time, chances are you didn’t lose any of the high users because the benefit is too important to them. The math tells them to stay on as a participant. So when you as an employer thought by charging more back to the employees each month would save money, it didn’t. In fact, it started a cycle that eventually results in costing you more. As an agency, we recommend that employers pay as close to 100% of the employee premium each month as possible, and if feasible, none of the dependent premium. An employer rarely knows what health conditions exist in the dependent class. Sometimes an employer has to make these changes over time and not abruptly. However, this restructuring of contribution ensures greater total employee participation which usually equates to a more balanced group, with longer term savings for all.