Life, AD&D, and LTD Case Study
The incumbent carrier had the Life, employer paid AD&D, and LTD. The Life had received a 7% decrease for plan year 2005, while the LTD had had the same rate for the last five years. In addition, the university was experiencing service issues with the incumbent.
Havens & Company’s review of the experience indicated that both the Life and the LTD were significantly overpriced. After Havens & Company asked only ten clarifying questions about the experience presented by the incumbent, the incumbent offered an off-cycle rate decrease and lowered the Life rate by 14.3% and the LTD by 26.1%.
No further rate reductions were pursued with the incumbent since the university decided to have Havens & Company put their inforce coverages out to bid so that they could:
- achieve greater financial savings;
- improve the level of service they were receiving;
- add an Employee Assistance Program that could be measured with utilization reporting; and,
- expand the voluntary coverage options available to their employees.
As a result of the RFP process, the university was able to achieve all 4 goals. From the financial perspective alone, they lowered their benefits spend for the Life, AD&D, and LTD by an additional 20.8% - in other words, with Havens & Company’s assistance, they achieved overall employer savings of 34%.
Savings Chart
| DIRECT | HAVENS & COMPANY - INCUMBENT | HAVENS & COMPANY - RFP | |
|---|---|---|---|
| Annual Premium | $1,230,000 | $1,023,000 | $811,000 |
| Renewal | Annual rate review | Annual rate review | 3 year rate guarantee |
| Employer Savings Annually/Over Rate Guarantee Period | ------------------ | $207,000/$621,000 | $419,000/$1,257,000 |