Changing Carriers: Not always the best solution.

by Jessica Guenard-Valiquette on July 16, 2012

When you’re running a business, it is always important to maintain a focus on the bottom line. Decrease costs, increase profits.

Many small to medium business owners focus on the opportunity to save costs by changing insurance carriers, but this isn’t always the best option.

As with anything, cost savings can be outweighed by a loss in value. Benefits Canada recently posted a fantastic article explaining this, so rather than re-invent the wheel, I thought I would repost that article here.

Take a few minutes quickly read it through, and as always, don’t hesitate to contact us with any questions. If you have a little extra time on your hands, go over to, and surf around their site.  It’s an excellent resource.



Moving carriers for solutions, not savings


Vikram Barhat | July 13, 2012

Originally from our sister publication,

The lure of better rates, better  service, streamlined administration, faster claims reimbursement and a  more client-focused service platform are the focal points used by  carriers to attract employee benefits plan business.

In reality, though, a transition from one carrier to another—while  meaningful in some ways—can be time consuming, disruptive and costly. In  the end, it’s a package deal where employers must be prepared to take the  rough with the smooth.

Employers always want to make sure they’ve got the best deal available,  says Tina Tehranchian, financial advisor, Assante Capital Management,  in Toronto.

She concedes, though, that the most suitable plan may not necessarily mean paying the lowest premium.


Sometimes there’s service issues where they’ve had  problems making a claim from the insurance company,” says Tehranchian.   “They are very frustrated and are willing to pay more just not to deal  with that insurance company anymore.”

There are times when it does make sense to change providers, says Brian Ganden, associate, Granville West Group, in Vancouver.

“Online platforms and plan administrator look-up tools have come a  long way,” he says. “Some providers offer tools that are very appealing  to some plan administrators.”

Tehranchian agrees it all depends on the unique needs of the company,  which may be more what the current carrier is able to meet.

“Some companies are very interested in the chiropractic limit or how  much massage therapy they can get,” she says while asserting that “by  far the number one motivator is the bottom line.”

Both Ganden and Tehranchian warn employers not to take short-term marketing discounts at face value.

“By the time all the associated costs and time are factored in the  actual savings from discounted premiums can be negligible,” says Ganden.

Tehranchian says too much focus on the bottom line can have long-term  implications.

“One of the caveats to watch out for is that some carriers really  lowball when they want to get new business,” she says. “If the quote is  considerably lower than the going market rate, there’s a good chance  you’ll see a big jump in premiums the following year.”

Unusually low quotes, she adds, are often too good to be true.

One of the biggest barriers to changing carriers is the cumbersome  process of doing it. There’s copious amount of paperwork to be done and  if there’s medical underwriting involved, some of the employees may not  qualify for portions of the coverage.

“The bigger the company, the more difficult it is to get everybody  onboard and get the paperwork done,” says Tehranchian. “Depending on the  structure of the plan, some underwriting might be needed, and that  could cause some problems.”

Brian Ganden, associate, Granville West Group, in Vancouver, says the  process can be quite time consuming. “Especially, when there are  possible changes to the coverage, there’s increased time spent on  administration, reenrolling members and on communication around the  change.”

Then there’s always the potential for errors in the enrollment; gaps  in information or transferring benefits improperly can cause  disruption.

“Errors often occur when [employers] don’t disclose certain facts  inadvertently or there’s error in paperwork that could cause a lot of  back and forth,” says Tehranchian.

Another reason why companies consider changing carriers is because  renewals get skewed when large claims are made by one or two people in  the group.

“They think by going to a new carrier they can solve that problem,”  says Tehranchian. “But it’s not that easy; every new carrier will want  to look at their claims experience, they will assess the situation and  use the same criteria to decide on the rates that the existing company  would have.”

Some benefit plans offer extended rate guarantees for a period of two  years. This provides some cost certainty, but these guarantees are  typically offered only on the less rate-sensitive benefits such as life  insurance and long-term disability, says Ganden.

Finally, changing carrier means forming a new relationship with the provider.

“The value of good relationships [becomes even more] evident while  handling a difficult administration situation or a challenging claim  need,” says Ganden.

© Copyright 2012 Rogers Publishing Ltd.

Originally published on



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