Increasingly, employers must look beyond traditional employee benefits of risk-ability planning and adopt creative and innovative financing agreements to optimize benefits and minimize risk.
We can determine the optimal funding agreement for benefit programs that consider your risk tolerance, employee population and goals and obtain the most efficient benefits and ongoing management of that investment.
Self Funding and Self Insurance
There has been a dramatic increase in self-insured health plans over the past decade, where employers assume direct financial responsibility for the costs of employees’ medical claims. Self-insurance can be a cost-effective solution for large employers and allows greater flexibility over plan design. Under a self-insured health program, employers typically contract with a third-party administrator (TPA) or insurer.
As a broker with deep consultative capabilities, we help benchmark benefits, design the program and operationalize the plan on behalf of the employer. The emphasis is on generating savings that accrue in different ways through improved program governance, consumerism, provider discounts, wider access through networks and data analytics. The majority of large establishments now use some form of self-insurance, and its adoption is growing among smaller organizations.
Benefits risk (Life, disability, medical, and personal accident) is a substantial premium spend for organizations. A captive is a special purpose insurance which is established to finance the risk from its parent groups. Captive insurance arrangements are typically used by large multinationals to self-insure selected risks. Globally there are over 5,000 captives established with a small but growing percentage that include benefits risks.
While some organizations establish multinational benefits pooling arrangements, others seek to improve risk financing by utilizing a captive to assume risks such as life/death, accident, disability and medical/ health care. This results in improved cash flow, consolidated premium spend, statistically predictable risk, the ability to create insurance reserves, greater management or risk retention levels, and diversification between risk classes thus improving capital efficiencies.