Why Municipalities Should Seek Competitive Quotes for Stop-Loss Insurance Each Year

Providing benefits for your employees requires you to balance cost control with the needs and wants of your workforce. As decision makers, you have to scrutinize every expense that crosses your desk. That’s especially true when you’re making financial decisions on behalf of a municipality.  Controlling your stop-loss costs is just one way to stretch your healthcare dollars without sacrificing employee benefits. Having the right level of stop-loss coverage allows a municipality to cap its financial risk while it provides a high-quality self-funded plan to its employees. But the stop-loss decisions you made last year may not reflect your current needs. That’s why we urge you to seek competitive quotes every year, even if you’re already working with a healthcare consultant.

Seeking competitive bids with the help of an independent stop-loss broker enables you to tap into multiple markets for pricing. This process gives you a menu of carriers, pricing and services to pick from—and, most importantly,  an unbiased look at the reality of your costs. Utilizing a specialist in stop-loss gives you more options resulting in the best outcome and value for your healthcare dollars. 

How to Get Competitive Stop-loss Quotes

Working with an independent stop-loss broker should make it fairly easy for you to gather all the information you need about your options. Your broker will help you solicit quotes, but the lowest quote won’t necessarily be the right one. You’ll want to compare all your potential carriers using several criteria. While seeking competitive stop-loss quotes, these are some of the questions I suggest you ask. 

• Is the quote provided through a direct writer or an MGU (managing general underwriter)? When a quote is provided through a direct writer, it essentially means the carrier does everything in-house. It does its own underwriting and insures its clients’ risk. An MGU uses a carrier’s license and underwrites on that carrier’s “paper,” but generally doesn’t have the capital to cover its clients’ stop-loss claims. 
• If the quote is provided through an MGU, who is the carrier and how much risk do they take? Does the MGU take any risk? If so, how much? It’s critical to take a close look at any MGU before moving forward. A municipality may choose to work with an MGU because it’s located within the community and provides the lowest quote. But MGUs can also lack financial stability, and there are other pros and cons to both the MGU and direct writer options. The answers to these questions will help you understand how your relationship with an MGU would work. 
• Does the carrier have any experience with municipal clients? If so, are they familiar with each state’s municipal laws governing municipal health insurance? As you well know, your health insurance needs as a municipality are very different from the needs of an independent business. Not all carriers cater to municipal clients or have enough experience complying with laws around municipal health insurance.
• Who is responsible for adjudicating the claim? The faster a stop-loss claim is adjudicated, the faster the client gets their reimbursement. Asking questions about this process helps you create a realistic picture of your reimbursement timelines. 
• What is the A.M. Best Rating for the carrier and how long have they been in business? A.M. Best is the primary credit rating agency for the stop-loss insurance industry. Its ratings provide a lot of information about a carrier’s financial stability and operating performance. If a carrier has an “excellent” rating, that’s a good sign about its trustworthiness. A carrier’s history is also relevant. A carrier that has been in business for decades may be more reliable than one that’s relatively new.

Don’t worry if you don’t have a deep understanding of stop-loss carriers and their services. When you work with a knowledgeable independent stop-loss broker, you should feel comfortable asking questions as they arise. Your broker will help you compare all your competitive stop-loss quotes to identify the one that best suits the needs of your municipality and its employees.  

Stop Loss Insurance Brokers pays special attention to the carriers we choose to quote business for each municipality we serve. We’re committed to helping each client find the most affordable and appropriate coverage for their needs. If you have any further questions on how to obtain competitive stop-loss quotes, contact me today!

Denise Doyle is the President of Stop Loss Insurance Brokers, Inc. She has over 30 years of experience in the industry and is a member of Self Insurance Institute of America.