G2-PD Implications of Concentration in the Group Marketplace By: Yves Rouvès

Impact of Concentration Importance of 3 aspects  Service to insured persons  Service to plan administrator  Cost Anything that disrupts any of these aspects will cause a problem to the employer

An Efficient Group Insurance Plan For the insured  Easy to understand  Easy to use (claims process, internet, 1-800…)  Pays the right benefits  Within a reasonable time

An Efficient Group Insurance Plan For the Plan Administrator  Pays the right benefits to the right persons  For the right reasons  Contracts / brochures up to date  Changes done quickly  Conformity with the employer’s expectations (disability management…)  Transfer of information (interface…)  Billing  Respect of financial agreement

An Efficient Group Insurance Plan At a Reasonable Cost  Direct costs (administration fees, premiums, …)  Indirect costs (interface, communication with the insured persons, communication with insurer…)

Impact of Concentration For the Insured  New brochures  Change in Plan / Section number  New points of contact (Internet, 1-800…, persons to contact,…)  Change claims payment lag  New forms  Change in coverage (real or perceived)  Follow-up on maximums (annual, lifetime…)  Frustration and loss of time if the functionalities of the new system are not the same as those that users are used to (even though the new system may be better overall)

Impact of Concentration For the Plan Administrator  Structure of contracts/sections  Update to contracts/brochures  New contact persons /phone numbers, fax numbers…  Unavailability of contact persons (due to assignment to special projects)  Efforts/personnel of the insurer focused on the integration  Change in information systems /software, validation of data  Current projects are delayed / reported or timeframes are not met  Increase in the volume of phone calls from the insured persons  Cost of training admin personnel  Increased risk of error if there is a change in systems  Increased need for communication with the insurer  Increased need for communication with the insured persons

Impact of Concentration For the Plan Administrator…  Standardisation is attractive for the insurer –Bring administration provisions of various contracts on similar bases  Easier to manage for the insurer  Potential problem if there is a conflict with the client’s specific needs

Impact of Concentration For the Plan Administrator…  Opportunity for the trade unions to sneak into the process –If the insurer has a reputation of being more stringent in the claims adjudication process –Opportunity for grievance if the problem situations are not settled in the same manner as with the former insurer (disability benefits, health & dental claims…)

Impact of Concentration Conclusion  The interests of the client seem minor among the real reasons for a merger of insurers  The client is promised : –A better capacity for delivering service –At a better cost  The client is delivered : –Increases in administration fees –Additional internal costs –Premium rates that are less competitive –Conditions (stop-loss, retention agreements, etc.) that are less favourable