Self-insured rate hike half that of fully insured plans
The growing popularity of self-insurance appears to be paying off, suggests Willis Towers Watson’s 2017 Marketplace Realities report, whose forecasted rate increases are 4% to 5% for self-insured plans and 7% to 8% for fully insured plans.
This activity, of course, reflects a larger shift for brokers and advisers who’ve seen group medical renewals erode alongside their commissions since the Affordable Care Act became law. But it also presents an opportunity to deepen client consultations and grow fee-based services.
The report also indicates that uncertainty remains high across the employee benefit space about the post-election evolution of healthcare reform, as well as legal challenges to proposed megamergers involving Anthem/Cigna and Aetna/Humana.
Marketplace Realities, published in the fall and updated every spring, features market snapshots of employee benefit, workers’ compensation, property, casualty and all executive risk insurance lines, as well as key specialty lines.
The commercial insurance market is generally expected to favor insurance buyers in 2017. This is particularly true for those with comprehensive strategic risk management and risk transfer strategies, according to the report.
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“While insurance companies have been struggling to achieve the level of growth that shareholders and industry analysts hope to see, the overall stability of the industry — its ability to absorb losses, pay claims following catastrophes and support sustainable business growth — is a positive sign,” Matt Keeping, head of broking for North America at Willis Towers Watson, says.
Continued adoption of high-deductible health plans with tax-advantaged savings accounts is seen as more employers move to full replacement and benefit designs that reward employees who participate in health-related activities.
Rounding out benefit packages
A recent Willis Towers Watson survey was cited to show that 88% of employers consider managing pharmacy costs and specialty drugs their top priority over the next three years. Researchers also noted that health plans are increasingly embracing telemedicine services, as well as value-based contracting and reimbursement arrangements.
In addition, numerous attempts are being made to fill coverage gaps and round out benefit packages. “Employers are redesigning or expanding the range of supplemental and voluntary benefits they offer, reflecting changing employee needs and the rapid generational workforce shift,” according to the report. “The voluntary benefits in greatest demand include identity theft insurance, critical illness benefits and pet insurance.”
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Prolonged low interest rates were cited for causing long-term disability rates to harden, as well as a backlog in Social Security submissions and decline in Social Security approvals. Other key developments in the benefits market include competitive life insurance coverage and rate guarantees that are increasing in length.
Work-life trends show a redesign and expansion of paid parental leave benefits along with adoption assistance and back-up child care benefits. Employers also are said to be tweaking paid time off policies to comply with legislation at both state and local levels of government.
In the workers’ compensation arena, costs are expected to remain steady, while combined ratios for carriers serving this market continue to improve. However, the report cautions that “certain states (e.g., Florida, New York and Massachusetts) pose challenges to those with large payrolls.”