Insurance Trend and Inflation Factors

When calculating my renewal rates, the insurance company used a “trend” factor. Why do they use trend and why is it much higher than general inflation rate in Canada?

By Joe Demelo, CEBS; Benefits Consultant

Although they are sometimes discussed in the same context, there are distinct differences between inflation and trend utilized by insurance companies. Although interrelated. they are not the same thing.  Inflation in Canada is often linked to the Consumer Price Index (CPI), and  is measured by taking changes in cost for a standardized “basket of goods”.  In Canada general inflation is around 3 to 4%, while inflation in healthcare has ranged from 10% to 15% depending on whose data you are reading.  So how are inflation and trend related?

All Carriers are the same – why do I care who I am with?

By Brent Delveaux and Queenie Yeung

The list of why insurance carriers are not all the same is extensive. For example there are non-for-profit insurance carriers, mutual or stock insurance companies, unionized and non-unionized companies and carriers who have various claims payment locations, different renewal processes, different expense factors, and different system capabilities. All these factors  have an impact on you, the client.  Expanding on each of the differences here would have you stop reading right about now…. So in an effort to keep you with us, we will solely focus on technological advancements in insurance, why you should care about it and how this differentiates insurance companies.

One of the reasons companies implement employee benefit plans is to help them attract and retain employees. With baby boomers slowly but surely leaving the workforce and Generation Y (born between 1982 and 1993) replacing them, it is important to care about the insurance company that you are with to see what they offer the Generation Y’s. In short, Generation Y’s are leading users in communication technologies such as email, texting, instant messaging, Facebook, Twitter, etc…  so to think that you will simply attract them with benefit booklets and paperwork, think again!

One noticeable disparity between insurance carriers is their attention to technology.  While some insurance carriers have adopted online claims submission, other insurance carriers have taken their approach to Generation Y’s to another level. For example, Great West Life has created a DrugHub iPhone app that is a virtual medicine cabinet that allows families to stay on top of medical information by reminding them when to take medication, when to get refills and it also provides easy access to detailed drug information. Sun Life Financial is soon introducing a smartphone application to allow for instant claims submission and a retirement service which will allow plan members to access their account information and financial planning tools. Sun Life Financial also introduced wireless enrolment for their group retirement services. An Education Specialist will bring a number of BlackBerry® PlayBooks™ to the session to help employees through the enrolment process screen by screen to input their information, choose their plans, contribution levels and investments. More importantly, this is available to you and your plan members free!

I understand that technology alone is not a reason to choose an insurance carrier but it does illustrate the point that insurance companies are different and that you should care about which carrier you are with.  Employee Benefits and Retirement plans cost both employers and employees money each year and if employees are not educated or engaged with the products and services, the money spent can be viewed as just an expense for both parties as opposed to something that is an actual benefit. With the influx of Generation Y’s in the workplace, technological advancement might be something you wish to consider when thinking about your employee benefit plans!

Related Articles:

Great West Life Tech
Sunlife – Gen Y Workforce
SunLife Tech Enrolment