BENEFITS
Employers fail to shop around to save on insured risk benefits
Companies could save up to a fifth of the cost of their insured benefits, simply by shopping around for a better deal, says Mercer. Despite increased competition in the insurance market and the potential savings on offer, employers are failing to take advantage of these opportunities.
Paul Ashcroft, a principal in Mercer’s health & benefits business, said: “Many organisations are not taking the opportunity to conduct a simple market comparison before signing up for renewals on their insured risk benefits, such as group life, medical and critical illness insurance”. He has observed some companies save as much as £250,000 by making a simple switch - without the need to change their current benefit provision.
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Why employers don’t shop around
Research by Mercer shows that the most common reasons employers give for not shopping around are:
the benefits were reviewed last year
organisations are using a provider they like and have been with for a long time
lack of internal resources to commit to a benefit review.
“In most cases, the majority of activity is undertaken by a broker without the direct involvement of the company’s staff, while the cost of conducting a review is just a small proportion of the savings that can be generated,” said Ashcroft. “In our experience, there are very few genuine reasons not to conduct a review.”
He added: “In today’s soft market conditions, these savings can often be made without having to accept lower benefits or reduced service levels.”
Cost savings
Mercer estimates that employers could save between 10% and 15% of their premium costs in cases where the benefits remain with their existing provider, but they can secure even greater savings when they change to another provider.
The most significant insured benefit costs are incurred through a small range of benefits such as private medical insurance, group income protection and group life assurance. But many companies have other, smaller costs that can be reviewed including dental insurance, health screening, employee assistance programmes and business travel insurance.
A final word
“The real impact of reviewing benefits is achieved by including all costs from across the business – not just those that sit within a single department such as HR, finance, occupational health or pensions. It is by leveraging the buying power of an organisation’s full expenditure that the greatest savings can be achieved.” - Paul Ashcroft, a principal in Mercer’s health & benefits business.
Want to know more?
Mercer is a “leading global provider of consulting, outsourcing and investment services”. Mercer works with clients to solve benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is also a leader in benefit outsourcing. Mercer’s 18,000 employees are based in more than 40 countries. To find out more visit http://uk.mercer.com/home.htm.