Primer

The best way to secure the most competitive stop loss quote is by supplying the underwriting team with as much usable information as possible.

When an RFP (Request for Proposal) is received in a stop loss carriers underwriting department, it undergoes a quick analysis. Requests that have complete and accurate information, immediately move on to the underwriting process. Those lacking information are either declined on the spot (busy season) or the underwriter may attempt to get further information (off-season).

A clean quote with all the requested information can be quoted within 5 business days during the off-season, or 10 business days during the fourth quarter.

The purpose of this primer is to explain why PBS needs the information we do.

Pre-Qualify Quotes

Always pre-qualify a group that is interested in self-funding.
The ideal group is one that is 75 lives or greater. Stop loss options are very limited on groups smaller than 75.
What is the industry of this group?
What is the group’s specific reason for shopping their benefits at the time.

Data Needed To Prepare A Quote

Location, Location, Location!
Location is everything in underwriting. All companies are rated according to zip codes. If a large company has several locations, you should include City, State and Zip for all locations and identify the Main Location. Including the number of employees at each location helps your group take advantage of areas that might be considered lower risk.

Who are you, and what do you do?
The nature of the business is key to underwriting. Please always include this information as well. SIC code is the best. Like a fully insured product, stop loss carriers want to know the risk of the profession. Some professions, by nature, have a high risk factor. Never just state “Manufacturing” without a full description. Ambiguity opens the door to too much assumption. Get the client the best rate by having the information.

Plan Design
The stop loss carrier needs to see the plan design they are going to be quoting. Plan designs show the level of risk that the company and the employees are going to share. Plans with rich benefits also have high stop loss premiums because the cost risk is higher for the stop loss carrier. The more cost risk a company is willing to assume by setting their specific stop loss higher, the lower the premium rates are going to be.

The Big Three: Carrier-Network-TPA
Stop loss carriers need to know who the current carrier is so they can establish a level of credibility with the claims data provided.

Also, the network currently used and to be used are important factors. Obtaining good PPO discounts for the groups lowers the risk to the stop loss carrier. Lower risk equals lower premium.

The underwriters will also want to know who the current TPA is. Credibility of the TPA currently paying claims is a big part in underwriting risk for self-funded plans.

The Census
This gives useful information about the group. Always include age, gender and status (single, family). Names are not usually required so this example format is acceptable. ie., (Male, 5/18/72, Single)

Monthly head counts show company stability which is another factor stop loss carriers look at when quoting.

The Rating
In this stop loss market, rates have become as important to underwriters as large claims reports. Many carriers will not quote if rates are not given. Always give rates for specific premium (single, family), aggregate premium, and include aggregate factors (single, family). For fully insured clients, include the current and renewal rates. Last years rates will be needed to calculate experience.

Underwriters always want to know what type of risk is being assessed. The specific and aggregate rates show them the risk involved; it is also a helpful tool in getting the best rate. Without these numbers many underwriters will quote “manual” rates, and as we know, manual rates are the highest rates around.

It’s all about Experience
Experience says it all. Carriers prefer two years of experience to provide a competitive stop loss quote. For groups that are currently self-funded, the best way to show experience is by providing an aggregate report. An aggregate report has all the claims experience an underwriter will want. All aggregate reports show monthly totals, employee head counts by month (shows company stability), claims over specific, and how the group is doing as a whole (aggregate). Aggregate reports are a requirement of all self-funded plans and are routinely filed monthly with stop loss carriers. All plan sponsors (employers) have a right to this information anytime they want it. TPAs keep this information as long as seven years. If the group is currently fully insured, please include current rates, last year’s rates, and the renewal rates.

The Large Claims
Generally as a rule of thumb, stop loss underwriters like to see who is at 50% of the specific deductible and who has gone over. This information has a significant impact on quoting stop loss rates. Please include the following information: Employee Name, Diagnosis, Prognosis, Treatments, Claims Amounts, Pending Amounts, and Case Management Notes. What might seem to be a costly illness might actually be low risk in the eyes of a stop loss carrier.

Diagnosis to look out for: Crohnes Disease, Cancer (certain cancers have a lower underwriting risk), Multiple Sclerosis, Renal Failure/Dialysis, and Organ Transplant (especially stem cell). One or two of these in a group can cause the underwriter to either place a laser, or decline the group all together.

Shopping Around
The more a group is shopped with different carriers and TPAs, the more credibility they lose. There is an overlap on the number of carriers in the market place so many stop loss carriers receive the same group from different sources. Each quote is rated on the probability of the sale. When a group comes in from different sources, the probability factor greatly diminishes. When it gets to this level, two things may happen: 1) the carrier will decline to quote on the spot, or 2) the carrier will manually rate the group, not taking into consideration any factors that normally would be a positive for the group. Either way the client loses that opportunity to get a good product at a good rate.

What PBS does for you!
When an RFP is submitted to our office for stop loss, we look at many of the factors highlighted. We then look at the stop loss carriers we work with and match the group to the carrier that would be the best fit. Traditionally, PBS works with over 20 stop loss carriers, but we may only send a quote out to half of those. PBS will never do a blanket mailing of RFPs. This is one reason so many stop loss carriers are willing to work with us.

PBS is more than happy to search the market for you and your client. We know your time is very important, so let us do your pricing.

If at any time you have questions, please call PBS we are here to help you and your clients.