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					2009 group insurance report

                                                                                              contain or cut costs, insurers have to be
                                                                                              able to perform effectively under pressure.
                                                                                              For many insurers, this simply means going
                                                                                              back to basics.
                                                                                                 “I think for companies like ours that
                                                                                              have strong core values, the adaptation is

                                                                                              really about sticking to those core values
                                                                                              and doing what you do, really well,”
                                                                                              explains Brad Fedorchuk, vice-president,
                                                                                              group marketing, with The Great-West Life
                                                                                              Assurance Company (No. 1).
                                                                                                 Stuart Monteith, senior vice-president,
                                                                                              group benefits, with Sun Life Financial
                                                                                              (No. 2) adds, “In this economy, there is
                                                                                              increased pressure on insurers to be more

        The group insurance                           ownsizing, salary freezes and           efficient in the delivery of our products. And
       industry isn’t immune                          cutbacks have become the way            we have to be increasingly sensitive to our
                                                      of the times, and insurers, like        clients’ needs. They are going through tough
    to the current economy.                employers, have to do more with less.              times. We need to understand their needs so
        However, insurers are                 “If you have a case that has 1,000 lives,       we can adapt and provide solutions.”
  expecting to bring change                you expect to collect premiums for all 1,000.         But just as providers need to be aware of
                                           If [the plan sponsor] cuts 200 employees,          their clients’ needs, they also need to make
       and innovation to the               you are only going to collect premiums             sure their own needs are being met. For this
   marketplace as a result of              for 800 lives,” explains Jean Guay, senior         reason, providers are becoming increasingly
              this downturn.               vice-president, group insurance, with              focused on bottom-line costs. “Insurers
                                           Standard Life (No. 10 on the Top 20 Group          are adapting [to market conditions] by
                                           Insurance Providers ranking). “If you look         presenting favourable renewal proposals to
           By april scott-clarke           at the benefits that are based on salary, like     [active] groups that have positive experi-
                                           disability and life, there is 2% or 3% inflation   ence results in an effort to maintain such
                                           that is factored into the plan. If the salary      business,” says Scott Heard, vice-president,
                                           isn’t increased, you don’t get that premium        sales and marketing, group insurance, with
                                           either. That has an impact on the revenue.”        Industrial Alliance (No. 9). “Conversely,
                                              With less revenue coming in and clients         less favourable renewal proposals are
                                           closely examining their plans to find ways to      developed for groups that have consistently
                                                                                              produced negative experience results.”
                                                                                                 Marg French, worldwide partner with
                                                                                              Mercer, says, “The insurance industry is
   the numBers                                                                                cautious and being a little more selective
                                                                                              in the risks that they underwrite. I think
   • the group insurance industry grew by 6.1% in 2008, slightly less than the                as a result of that, there is more thorough
     7.2% growth it realized in 2007.                                                         analysis of risk going on.” However, Guay
                                                                                              says risk management is something that
   • the Great-West life assurance company of canada has once again secured                   the industry always pays close attention
     the no. 1 spot in the top 20 Group insurance providers ranking with insured              to. “Risk management is the basis of our
     premiums and non-insured deposits of $6.4 billion.                                       business. We’re paid for this expertise.
                                                                                              There are many factors insurers consider
   • among the top 10 Group life providers, standard life is no. 7 this year                  when assessing risk, including the economic
     (bumping the co-operators to the no. 8 spot) with $57.6 million in insured               climate. This is not specific to the current
     premiums.                                                                                market conditions; it’s an ongoing process.”

   • Green shield canada has entered the top 10 Group Health providers list at                More for Less
     no. 8. Green shield reported $298 million in insured premiums in 2008—a                  Times are tough and clients want to see
     29.8% increase from its 2007 figure.                                                     their dollars go further. They want better
                                                                                              service and more options, but they don’t
   • desjardins financial security has bumped the co-operators off the                        want to pay extra for it. So what does this
    top 10 administrative services only providers list, with $93.4 million in                 mean for insurers? “Clients’ expectations
    non-insured deposits as of the end of 2008—a 30.3% increase over the                      of all suppliers are increasing,” explains
    $71.7 million the company reported for 2007.                                              Heard. “Clients are seeking the best service
                                                                                              provider and the lowest possible price.

32 april 2009                                                                                               
Clients are much less willing to pay a                     meet these new needs. “We are coming out                 we are behind them and supporting them in
premium for preferred service. Successful                  with some products and services that are                 these tough times. They are looking to us to
insurers will be required to offer “best in                helping companies through the downsizing                 provide some innovative ideas. We also really
class” service at a highly competitive price.”             process. Products like voluntary benefits                need to focus on quality customer service.”
   But that’s not all clients are looking for.             and rollover benefits for those who may find                Additionally, Heard says, “Third-
As their workforce becomes more dynamic,                   themselves out of the workforce temporarily              party-administered arrangements are
employers need products that will help                     or permanently,” Monteith says. He adds that             growing in number and influence across
them—and their employees—through                           clients want their relationships with their              Canada, as benefits advisors seek increased
times of transition. If insurers want to grow              insurers to be more collaborative and more               leverage with providers to better serve their
their market share, they have to be ready to               of a partnership. “They need to know that                clients’ needs and expectations.” He explains
                                                                                                                    that when clients are looking for potential
                                                                                                                    claims payers, they are looking at more than

  top 20 Group                                                                                                      just price. They’re also considering aspects
                                                                                                                    such as call centre capabilities; online
  insurance proviDers                                                                                               administration systems; solvency of the
  insured premiums and non-insured deposits (in millions) as of dec. 31, 2008.                                      claims payer; claims management expertise;
                                                                                                                    electronic explanation of benefits; direct
       company                                        2008           2007      $ Variance % Variance                deposit capabilities; and employee commu-
  1    the Great-West life                                                                                          nications support. “Plan sponsors will seek
       assurance company                         $6,448.0         $6,015.1           $432.9               7.2%      provider relationships that satisfy all of these
                                                                                                                    needs,” he says. Insurers need to be at the
  2    sun life financial                         $6,267.4        $5,917.3            $350.1              5.9%
                                                                                                                    top of their game, providing clients with the
  3    manulife financial                         $6,022.3        $5,816.5           $205.8               3.5%      best service—and price—they can offer.
  4    desjardins financial security*              $1,753.7       $1,623.2           $130.5              8.0%
                                                                                                                    getting personal
  5    Green shield canada                         $1,144.7       $1,057.9            $86.8               8.2%      The practice of expanding employer-paid
  6    ssQ life insurance company                 $1,089.0       $1,029.0             $60.0               5.8%      benefits to become better armed in the
                                                                                                                    talent war is coming to an end. “We are
  7    pacific blue cross                           $963.7          $912.0             $51.7              5.7%      seeing a movement toward plan sponsor and
  8    medavie blue cross*                          $835.6          $791.8            $43.8               5.5%      plan member cost-sharing, whatever that
                                                                                                                    looks like: increased deductibles, introduc-
  9    industrial alliance, insurance
       & financial services inc.                    $807.6         $725.4              $82.2             11.3%
                                                                                                                    tion of formularies,” says Todd McLean,
                                                                                                                    principal with Eckler Ltd. “Gone are the
  10 standard life of canada                       $609.0          $560.9              $48.1              8.6%      days where employers picked up the whole
  11   the co-operators                              $349.1         $345.1              $4.0               1.2%     tab for benefits programs. Most plans don’t
                                                                                                                    have formularies, but we are seeing an
  12 la capitale assurances et                                                                                      increase in them because it’s a cost-contain-
     gestion du patrimoine                           $317.6        $282.5               $35.1            12.4%
                                                                                                                    ment technique.”
  13 the empire life                                                                                                   Until recently, wellness was the word in
     insurance company                               $306.1        $286.9              $19.2              6.7%      the group insurance market, but economic
  14 rbc insurance*                                 $253.2         $254.9               -$1.7           -0.7%       conditions seem to have stifled the buzz. “It
                                                                                                                    now appears that plan sponsors are focusing
  15 equitable life of canada                        $249.1         $241.2               $7.9             3.3%      their attention on their existing benefits
  16 manitoba blue cross                            $220.6          $214.8              $5.8              2.7%      programs and are not investigating the
                                                                                                                    potential value of additional offerings such
  17 blue cross life*                                $193.7         $177.0             $16.7              9.4%
                                                                                                                    as health and wellness initiatives,” Heard
  18 saskatchewan blue cross                          $52.9           $48.1             $4.8            10.0%       explains. “It seems unlikely that plan spon-
  19 assumption life                                   $51.3         $46.8              $4.5              9.6%
                                                                                                                    sors will consider additional investment in
                                                                                                                    their benefits plans until confidence returns
  20 the Wawanesa life                                                                                              to the financial markets.” Guay believes that
     insurance company                                $31.0          $29.0              $2.0              6.9%      once the markets stabilize, the focus will
                                                                                                                    return to health and wellness products.
       top 20 total                             $27,965.6 $26,375.4                $1,590.2              6.0%
                                                                                                                       Heard points out that the current
       industry total                           $29,730.7 $28,012.7                $1,718.0              6.1%
                                                                                                                    economic environment also has plan spon-
                                                                                                                    sors rethinking the funding arrangements
  *restating 2007 numbers. note: all totals are subject to a +/- variance due to rounding. alberta blue cross
  reported revenues of $1,713 million. However, this figure includes premiums for government-sponsored social       and designs of their plans. He says these
  benefits programs and has therefore been excluded from the ranking. this revenue, however, is included in the
  industry total figure. all numbers are reported by the individual companies. Benefits Canada is not responsible
                                                                                                                    challenging times are causing some plan
  for the accuracy of the numbers reported.                                                                         sponsors to reassess their previous decisions
                                                                                                                    to switch from an insured arrangement (in                                                                                                                                   april 2009 33
 top 10 Group life proviDers                                                                                         “retiree health
 insured premiums (in millions) as of dec. 31, 2008.                                                                 proDucts anD
      company                                         2008           2007       $ Variance % Variance                inDiviDual health
 1    the Great-West life                                                                                            proDucts are
      assurance company                              $664.1         $616.2             $47.9               7.8%      somethinG that
 2    sun life financial                             $590.1        $578.0                $12.1                2.1%   we will Be
 3    manulife financial                            $545.6         $538.8                $6.8                 1.3%
                                                                                                                     payinG attention
 4    desjardins financial security                   $181.3        $173.7               $7.6             4.4%
                                                                                                                     to in 2009.”
 5    ssQ life insurance company                     $105.5          $96.2               $9.3              9.7%

 6    industrial alliance, insurance                                                                                                     — BraD feDorchuk,
      & financial services inc.                      $94.6           $84.9               $9.7             11.4%
 7    standard life of canada                          $57.6         $53.4               $4.2              7.9%                          Group marketinG,
                                                                                                                                         the Great-west life
 8    the co-operators                                $55.5          $55.0               $0.5             0.9%
                                                                                                                                         assurance company
 9    blue cross life*                                $43.5          $40.4                $3.1             7.7%

 10 la capitale assurances et                                                                                        which the insurer accepts the liability for
    gestion du patrimoine                              $35.1         $33.3                $1.8            5.4%
                                                                                                                     the total claims paid and the plan sponsor’s
                                                                                                                     liability is limited to the premium charged
      top 10 total                                $2,372.9 $2,269.9                  $103.0               4.5%
                                                                                                                     by the insurer) to an administrative services
      industry total                              $2,471.4 $2,366.2                  $105.2               4.4%
                                                                                                                     only (ASO) arrangement [in which the
 *restating 2007 numbers. note: all totals are subject to a +/- variance due to rounding. all numbers are reported
                                                                                                                     insurer or other third-party claims payer
 by the individual companies. Benefits Canada is not responsible for the accuracy of the numbers reported.           (TPP) provides claims payment services
                                                                                                                     and related administrative support but is not
                                                                                                                     financially liable for the claims payments].
                                                                                                                     In ASO arrangements, the plan sponsor is
                                                                                                                     financially liable for claims payments and
 top 10 Group health proviDers                                                                                       receives a monthly invoice from the insurer
                                                                                                                     or TPP for the claims actually paid. “We
 insured premiums (in millions) as of dec. 31, 2008.
                                                                                                                     are seeing an increasing number of requests
      company                                         2008           2007       $ Variance % Variance                that involve a potential switch from ASO
                                                                                                                     to insured benefits as plan sponsors seek to
 1    the Great-West life
                                                                                                                     limit their potential liability for health and
      assurance company                           $3,237.2       $3,038.9             $198.3               6.5%
                                                                                                                     dental benefits,” Heard confirms.
 2    manulife financial                         $3,008.0        $2,947.7              $60.3              2.0%          Another area that’s starting to receive
 3    sun life financial                         $2,424.9        $2,260.3             $164.6               7.3%      more attention during these times—and
                                                                                                                     one that providers feel is going to grow
 4    desjardins financial security               $1,479.0        $1,377.8             $101.2              7.3%      in the future—is individual insurance and
 5    ssQ life insurance company                    $968.8         $900.5              $68.3               7.6%      healthcare products. “Retiree health products
                                                                                                                     and individual health products are something
 6    industrial alliance, insurance
                                                                                                                     that we will be paying attention to in 2009,”
      & financial services inc.                        $611.1      $545.8              $65.3             12.0%
                                                                                                                     says Fedorchuk. “They may provide solu-
 7    standard life of canada                       $423.7         $390.3              $33.4              8.6%       tions to plan sponsors. If they are looking to
 8    Green shield canada                           $298.0         $229.6              $68.4             29.8%       shed costs, sometimes [individual products]
                                                                                                                     are an opportunity. We’ve had those products
 9    la capitale assurances et                                                                                      on the shelf for years. It’s just that there is
      gestion du patrimoine                          $271.6         $239.5              $32.1            13.4%
                                                                                                                     more focus on them right now.”
 10 the empire life                                                                                                     Dustin Coté, assistant vice-president,
    insurance company                                $261.0        $244.3               $16.7             6.8%       product and marketing services, group
                                                                                                                     benefits, with Manulife Financial (No. 3),
      top 10 total                               $12,983.3 $12,174.7                 $808.6               6.6%       says his company has had a lot of requests
      industry total                             $14,618.1 $13,766.4                 $851.7               6.2%       for, and interest in, optional products. To
                                                                                                                     meet that demand, Manulife launched
 note: all totals are subject to a +/- variance due to rounding. all numbers are reported by the individual
 companies. Benefits Canada is not responsible for the accuracy of the numbers reported.                             personal critical illness (CI) insurance and
                                                                                                                     personal life insurance this year. “From                                                                                                                                    april 2009 35
what we’ve seen, personal CI and personal
life are quite unique right now,” he says. “In    “we have Been DoinG thinGs the
the future, [personal products] will be an        same way for a lonG time. we’ve
increasing area of interest among sponsors
and members.”                                           maDe some improvements,
    McLean agrees that the availability of and          But i think we’re reaDy
interest in personal products will increase. In
fact, he sees this segment developing beyond
                                                        for chanGe.”
just CI and life insurance. “As benefits                — stuart monteith, senior vice-presiDent,
[programs] become more complicated to                   Group Benefits, sun life financial
manage, more expensive for plan sponsors to
carry and more involved for them, we could
very well see a point in time when plan spon-
sors seek to outsource plan sponsorship,”
he speculates. “Instead of an organization
offering its own employee benefits program,
we may see a time when individuals secure
their own coverage with funds provided by
their employers. Those arrangements would
be portable so the individual worker could
take it with them to a new job. That isn’t
a year down the road, and it may not even
be five years down the road, but it’s not an
impossible thought. It’s going to take a lot
of courage for the first organization to do
it. This could change the way benefits are
delivered to Canadian workers.”
    While the downturn seems to be
stimulating product innovation and customer
service, there are also unfortunate trends
that have begun to emerge. Many insurers
are seeing, or expect to see, an increase
in disability claims and more requests for
absence management services. “We haven’t
seen [more claims than usual] yet, but with
long-term disability, the waiting period is
17 to 26 weeks. So we may start to see some
increase in incidence [soon],” explains Guay.
“There is a risk that the duration [of leave]
may be longer because if someone is on
disability and the employer starts to lay off
people, that may cause some stress, which
can complicate and extend the duration.”

time for change
Insurers are well aware that employers are
being cautious with their money, which
means they will need to work harder over
the next year to keep the clients they have
and to increase their market share. “The
market is very aggressive,” says André
Simard, vice-president, sales and group
and business insurance, with Desjardins
Financial Security (No. 4). “Clients
know that going to market could result in
significant savings for them. So what we are
seeing is the marketing of their plans, even
if there is no service problem.” To avoid
this, some insurers are compromising on
prices and renewal conditions with clients                                                                                  april 2009 37
  top 10 aDministrative
  services only proviDers                                                                                           as a way to keep them. “It makes it harder to
                                                                                                                    sell to new groups,” says Simard.
  non-insured deposits (in millions) as of dec. 31, 2008.
                                                                                                                        To add to the situation, the ever-
       company                                        2008           2007      $ Variance % Variance                increasing cost of healthcare—drug
                                                                                                                    costs specifically—is an issue that is on
  1    sun life financial                         $3,252.4       $3,079.0             $173.4              5.6%
                                                                                                                    everyone’s radar as more biologic drugs and
  2    the Great-West life                                                                                          therapies enter the market. These are often
       assurance company                          $2,546.7      $2,360.0              $186.7              7.9%      the result of extensive research and require
  3    manulife financial                         $2,468.7       $2,330.0             $138.7             6.0%       specific (and usually complex) administra-
                                                                                                                    tion protocols, which is part of the reason
  4    Green shield canada                          $846.7          $828.1             $18.6              2.2%      they often come with large price tags. In
  5    pacific blue cross                            $751.9        $708.7              $43.2               6.1%     most cases, biologic drugs are treatments
                                                                                                                    for conditions that previously didn’t respond
  6    medavie blue cross                            $601.1        $563.9              $37.2              6.6%
                                                                                                                    to other forms of therapy.
  7    manitoba blue cross                           $145.8          $141.5             $4.3              3.0%          Finding a way to make more biologics
  8    standard life of canada                       $127.7          $117.2            $10.5             9.0%
                                                                                                                    available to plan sponsors and members at an
                                                                                                                    affordable cost isn’t going to be an easy task,
  9    industrial alliance, insurance                                                                               but it is something that needs to be done.
       & financial services inc.                     $101.9          $94.7               $7.2             7.6%      “I think new biologic drugs will present
  10 desjardins financial security*                   $93.4           $71.7             $21.7           30.3%       breakthroughs for our members, and we have
                                                                                                                    to find a way to get these items covered, but
       top 10 total                              $10,936.3 $10,294.8                 $641.5              6.2%       it’s a challenge as we see costs continue to
       industry total                            $12,641.2 $11,879.8                 $761.4              6.4%       rise,” says Vic Medland, president of group
                                                                                                                    insurance services with the Ontario Teachers
  *restating 2007 numbers. note: all totals are subject to a +/- variance due to rounding. alberta blue cross       Insurance Plan (a third-party administrator).
  reported non-insured deposits of $1,500 million. However, this figure includes premiums for government-
  sponsored social benefits programs and has therefore been excluded from the ranking. this revenue, however,           Monteith says the rising cost of health-
  is included in the industry total figure. all numbers are reported by the individual companies. Benefits Canada
  is not responsible for the accuracy of the numbers reported.
                                                                                                                    care is the No. 1 issue in the industry right
                                                                                                                    now. Moving fast into the No. 2 spot is
                                                                                                                    the need to support plan sponsors and the
                                                                                                                    growing number of employees who are
                                                                                                                    retiring or facing unemployment. “The
                                                                                                                    current economic environment is going to
                                                                                                                    throw us some curves, and we have to be
                                                                                                                    braced for that. We need to contain expenses
                                                                                                                    internally and make sure we are efficient.”
                                                                                                                        Although money is tight and cost is on
                                                                                                                    everyone’s mind, providers feel the group
                                                                                                                    insurance industry is on the brink of change.
                                                                                                                    “I think our industry is headed toward more
                                                                                                                    innovation,” Monteith says. “We have been
                                                                                                                    doing things the same way for a long time.
                                                                                                                    We’ve made some improvements, but I
                                                                                                                    think we’re ready for change. We need to
                                                                                                                    provide better solutions. I think our industry
                                                                                                                    is poised to start delivering some creativity
                                                                                                                    and innovation to our end-users.”
                                                                                                                        As the group insurance industry waits out
                                                                                                                    the current economic crisis, there is no doubt
                                                                                                                    that some financial damage will be done. But
                                                                                                                    the innovation and service enhancements
                                                                                                                    that will come because of the changing
                                                                                                                    needs during this economic downturn may
                                                                                                                    ultimately improve the industry. Bc

                                                                                                                    april scott-clarke is assistant editor of
                                                                                                                    Benefits Canada.

                                                                                                                      For the 2009 group insurance Directory
                                                                                                                      and more, go to

38 april 2009                                                                                                                        

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