It is a question that sometimes comes up around renewals from our clients, especially when rate hikes are present in a renewal quote: ‘Can we shop around for a better quote?’ While the answer our clients might expect is a straightforward yes or no, there are more factors to consider.

The first question that our team might ask is ‘Why do you want to shop?’. Identifying if there is a valid reason to tender for a new insurance provider and plan is step one. As a benefits consultant, we aim to please. If our client has fair reason for wanting to find another provider, then we are happy to accommodate their request.

5 Reasons to Shop for a New Employee Benefits Plan Provider:

1. The existing provider is overpricing a renewal quote based on claims experience and not willing to negotiate. (We validate this on behalf of our clients with our own assessment and calculations.)

2. The existing provider does not offer certain value-added services that are important to our client, such as having a local representation and support or an online submissions portal.

3. The existing provider does not accommodate plan upgrades that our client would like to have such as a specific medical appliances or services.

4. The existing provider cannot appropriately fund the plan such as providing administrative services for the client’s group size.

5. The existing provider offered poor service or made major errors on plan administration.

The Implications of Shopping to ‘Just Know’

Another common reason for considering a market tender is our client wanting some level of reassurance that they are being quoted fairly. They want to know if a better deal exists, and that is okay. While we can do our due diligence and offer our clients peace-of-mind in sourcing other quotes, we have found that our clients seldom move to the other provider, even with a reduced premium on the table.

The reason? It can actually cost our client a lot of time and staff resources to move to a new provider. Employees will have to recomplete forms, become familiar with the offering and relearn the processes to file claims with the new provider. It can be a difficult and time-consuming process that is simply not worth it in the end, especially if none of the more critical reasons to switch providers are present. If our clients are happy with their plans and the service they receive from the insurance provider, we usually recommend remaining a loyal client.

Another consideration to make before moving to a new provider for the sake of saving money is that a rate hike is often inevitable the following year. There is no real value in saving some money one year, knowing the insurance provider will likely increase rates next year in hopes of recouping any potential lost revenues they have faced in offering that initial cheaper rate.

Another extreme that we dissuade our clients against is shopping every year. Every insurance provider keeps a database of the quotes they submit to potential clients. If insurance providers realize that a company is quoting every year and never buying into a plan, the company will eventually be denied any quotes and essentially black-listed. In the future, if there is ever a really good reason to source other quotes, this option might no longer be possible.

Working with a Trusted Benefits Consultant

There is a difference between dealing with a broker and an experienced consultant. A broker might shop for a client every year, because they want to make the sale. An experienced consultant will take the time to advise a client on the implications of certain decisions and the realities of the industry, helping them plan ahead, as above.

While clients might consider going to another consultant or broker if they are unsure of whom to trust, insurance providers rarely provide preferred pricing to one broker or consultant over another. The pricing will remain the same, regardless of who is working on behalf of the client. The notable difference is in the service offered.

Ultimately, the client should rely on a consultant who will be transparent, and tell them the ins and outs of the industry. As service-oriented consultant, our job is to offer our clients honest answers, and to guide them through the process of finding an employee benefits plan that meets their needs and their budget. As long as it is in our client’s best interest, we will also freely advise them the best time to consider a competitive market tender.