Should you be shopping for Corporate Health Insurance?

2020 has been an extremely hard year for companies in around the world, but it has been particularly tough for those located in Hong Kong. Against the backdrop of widespread protests for most of 2019 and Covid-19 in 2020, its safe to say that for many organizations business has not been easy.

With all of this in mind many companies have taken the sensible approach of cutting back their major costs; organizations that do not currently have health insurance coverage for their staff are not looking for that protection, and businesses which do offer a medical plan to staff are generally renewing with their existing insurer for the best possible policy terms.

But is this really the best approach? It might not be, and there may be value that is going missing and opportunity which is not being taken advantage of during this tumultuous time.

Group Health Insurance is a key Employee Benefit

Group health insurance has long been a major component of Employee Benefits Packages in Hong Kong. Companies which include medical protection as a part of an employee’s compensation package are able to attract and retain the best talent.

We’ve made the case for corporate health insurance products before, and these policies afford staff a level of safety and security in knowing that they are able to receive high quality healthcare as and when they need it. However, the downside to group health insurance protection is that the coverage is normally quite expensive – the more people you have on a policy and the older their average age, the higher the overall cost of the insurance.

This puts many organizations in a position where they may otherwise wish to obtain a Group Health Insurance policy, but are unable to do so because of cost considerations; cost considerations that have not diminished in light of the economic situation over the last year. While adding more employees to a group health insurance plan does generally yield a discount, for organizations which were struggling with the costs of coverage initially those discounts are not normally substantial enough to yield a purchasing decision.

This is not to say that businesses which have an established health insurance offering are not suffering the same issues. Group Health Insurance is a key employee benefit. While getting rid of a corporate health insurance plan would mean cutting a large cost from the annual budget, the continued existence of the policy is going to be of great concern to employees who have come to rely on its protection. Additionally, implementing wide spread organizational changes on the level of cutting benefits programs and job perks is risky in the current climate.

It is for this reason that businesses which may wish to cut their health insurance costs from their books are seemingly choosing to simply renew their existing coverage. While this maintains a steady ship, and gives employees the security that they require, it still means a high expense every year as the policy needs to be maintained. Even if you are going to receive a discount this year from the holding insurer.

Renewing could be a good option

For many businesses this year has seen lower claims being filed through their group health insurance policies. This means that the claims data, which is normally a crucial renewal consideration for larger groups, will be lower. Remember, groups of 3 or more people can receive Medical History Disregarded, so the claims submitted during the policy year will be a major influence on how much the cost of the plan will be in the following year; the insurer will normally increase the overall cost to adjust for the increased risk associated with the higher cost of claims.

However, because of Work from home and the concern over Covid-19 many employees have not received the surgeries they were scheduled for, with upcoming surgeries generally being postponed to a later date. Additionally, many outpatient visits have been avoided or have occurred in lower volume because of the risk of exposure to the virus.

This presents an interesting situation for companies who are thinking of renewing their policy. Because of the decreased claims volume during the current policy year it may be possible to ask the holding insurer for a substantial discount over the current policy terms. It is important to note that there is the risk of a major cost increase in the following policy year as all the postponed surgeries and ancillary medical costs catch up to the insurance. Its basically a case of robbing Peter to pay Paul – you’re likely to get a discount now, but are almost guaranteed to pay much more later.

Shopping for a new plan might be better

The current situation, which for many companies has seen no medical insurance purchase or simply renewing on the current policy, has created an extremely interesting situation. Insurance underwriters are not getting the opportunity to bid for as much business as they would like.

There is a risk in moving to a new insurance provider at this time. While it is not a wholesale change to the organization or the removal of a core benefit, changing health insurance does create a headache. For example, what is the most effective way to onboard employees who are working from home because of Covid-19 restrictions? While a zoom call would work, it may not be as efficient as in person methods.

However, while renewal rates have generally been high in the back end of 2020, Insurers have not been getting the new business they want and are open to being more flexible on the price of coverage. This means that any company shopping for a new group health insurance plan may actually be able to improve their coverage while decreasing their overall cost.

Consequently, this may be (in bizarre fashion) the best time ever to look at improving your group health insurance situation. If you’re holding a health insurance policy you may be able to give your employees even more security in an uncertain climate while reducing the amount that you are spending.

And with quotes and consultations with CCW Global’s expert corporate insurance brokers being completely free of charge, there is absolutely no risk and no obligation to you in exploring the market. So Contact Us today and arrange a conversation with one of our experts to see how we may be able to help you.