For companies in Singapore, insurance program remarketing is generally conducted for 2 reasons:
(a) to check that the company’s current health insurer is still offering competitive cover and pricing. In this case, the insured may have no real intention of changing insurers unless they receive a significantly better quotation.
(b) with genuine intent to change health insurers. The company may be looking to significantly improve the cover for their employees or obtain substantial premium savings. Often it is triggered by dissatisfaction with the current insurer.
Assuming that you are working with an insurance broker, this article will guide you through remarketing your group health insurance program effectively. If you are not currently using a broker, you may need to perform the following tasks listed yourself. Here are 7 practical tips to get the most out of a remarketing exercise for your company.
1. Set clear goals
Firstly, consider what you want to achieve and discuss it with your broker. Goals could include:
(a) Testing the market to ensure the competitiveness of your program
Whilst you may be generally happy with your current health insurance cover and insurer, premiums tend to increase each year due to medical inflation. It always pays to check that your program is still competitive both in terms of benefits and pricing.
(b) Managing costs / reduce premium
Companies often budget for a 10% increase in medical insurance premiums. When business is good, they may accept an incremental increase. As medical costs generally increase from 7-12% per annum, 10% is not a bad rule of thumb.
However, this does not factor in claims experience. Your broker should provide you with claims updates at least every quarter. If your claims are on track to exceed the premium, you may face an increase of far more than 10%.
Another factor is that different insurers have different approaches to underwriting (how they determine their premiums). Some insurers apply age-banding while others do not. As your workforce changes and ages, your insurer may become less competitive. This, alongside deteriorating claims experiences, are common reasons for deciding to remarket a health insurance program.
(c) Improving the coverage for your employees
To remain competitive and retain or gain market share, the health insurance market is dynamic and always changing in Singapore. With new benefits and products launched, your insurance broker should be keeping you informed of these changes. You should also be notified when there is an opportunity to improve the benefits that your employees enjoy.
Research consistently shows that a robust health insurance plan can be used by employers to attract, engage and retain talent – something that most employers in Singapore identify as a challenge. The benefits that you selected 2 or 3 years ago when buying your group health insurance may no longer be as attractive. A remarketing exercise is thus a good way of benchmarking the benefits on offer and enhancing your plan.
2. Partial or whole market exercise?
Do you want a whole market or just a partial market exercise? There are pros and cons to each.
A full-market exercise involves soliciting quotations from all eligible health insurers. While this requires far more time and work, it ensures that you will generate maximum competition and choice. Do note to avoid conducting a full-market exercise every year as the various insurers may tire of not winning your business. They will begin to decline to quote as a result, which defeats the purpose of a full-market exercise.
A partial-market exercise, as the name suggests, involves obtaining quotations from a selection of insurers rather than the whole market. This is a useful mechanism to check that your current health insurance program is competitive in terms of cover and pricing. Your broker should strategically select the insurers to include based on their product, pricing, and flexibility. With a knowledgeable and capable insurance broker, a partial market exercise will deliver many of the benefits of a whole market exercise.
The ideal remarketing strategy combines both approaches: A full-market exercise every 3 years, with strategic, partial market exercises in the 2 intervening years.
3. Agree on a timeframe
With that said, the timeframe will be determined largely by whether you choose a whole market or a partial market exercise. Bear in mind that even when using an insurance broker, there is still a lot of preparatory work needed from you, the client.
Based on the chosen remarketing exercise, the process can take an average of 3-4 months from start to finish. Either way, your broker should be holding a pre-renewal strategy meeting with you 3-4 months in advance of your program expiry date.
Give yourself 2-3 weeks to finalise the employee census data and obtain the up-to-date claims data from your insurer.
Ideally, you want to allow 4 full weeks for your broker to be negotiating with Insurers, especially for the whole market exercise. Your broker will usually have 3 or 4 discussions with each insurer as part of the negotiation process and this takes time.
Factor in 1 week to consider the collated quotations and recommendations presented by your broker and for clarifications.
You should be communicating your choice of insurer to your broker no later than 2 weeks before expiry so that the cover can be confirmed comfortably ahead of time.
4. Conduct the remarketing exercise
Moving forward, your broker will drive this next phase of the process and they have a lot of work to do. As mentioned, you should allow 4 weeks for this phase. Make sure they provide you with regular updates on their progress so that you do not receive any surprises.
A good broker will already know the strengths, weaknesses, and competitive advantages of every insurer and product. They will use that knowledge to good effect when negotiating and generating competition. If all they are doing is acting as a postbox for the insurer’s quotations, you may want to consider looking for a new broker. A broker’s job is always to add value and bring to the table, services, or insights that you do not have access to yourself.
5. Compare results
This part can be confusing, especially if you chose the whole market exercise which may entail reviewing the quotation details of 10 or more insurers. However, as an insurance policy is essentially a legal contract, avoid taking shortcuts on this comparison. Do your due diligence to understand what is covered and what is excluded in each quotation.
In fact, your broker can help to present the quotations in a format that makes it easier for you to make your decision. This would normally come in the form of a comparison table. Your broker should highlight the advantages and disadvantages of each quotation and provide their recommendation for your insurer along with a clear explanation of their reasoning.
At Expat Insurance, we apply our own assessment mechanism for the insurers that we deal with, scoring them on everything from their flexibility to their turnaround times and claims performance. We include these scores in our comparison tables to help our clients make their choice. In our experience, most brokers do not do this in Singapore.
6. Give formal instructions
Once you have made your choice, you need to advise your broker in writing and instruct them to proceed to bind the cover.
As mentioned above, you should aim to inform your broker of your decision at least 2 weeks before the expiry date so that they can complete the placement and ensure contract certainty. They will request formal confirmation from the insurer that cover is in force and provide a copy to you.
7. Communicate the program details
Once the remarketing exercise is completed and cover is bound, one important step remains. If you have changed the cover or insurer, the new program needs to be communicated to your employees. Your broker can run these socialisation sessions, explaining the benefits and conducting Q&A.
To get started, use the below renewal timeline as a guide. Like any undertaking, how the exercise is conducted can have a significant impact on the results achieved. Carrying out a detailed and compliant remarketing exercise, however, can be time-consuming and labour-intensive. As this will involve approaching the insurance market and obtaining competitive quotations from a range of health insurers for comparison purposes, most companies would engage an insurance broker to oversee it.
Don’t hesitate to reach out to our team at Expat Insurance today to find out how we can streamline this process for you.