By Tim Starr, CIC, CRM, CRIS, CWCA, AB; Owner & CEO
Our desire to alter — dare I say eliminate — the never-ending increases in benefits premiums has caused us to think differently than in the past. Unfortunately, by and large, the industry has focused on “cost compression” and not the logic of applying “risk mitigation principles” along with it. This continues to haunt us and we kick this can down the road. The frustration and anger over ever-increasing benefit costs came before our realization that applying risk management principles FIRST is more effective than cost compression strategies void of risk management.
Let’s take a look at two insurance myths:
1) We can only manage and change risky behaviors of our employees in the name of Workers Compensation “safety”.
Our historical thinking as a business has been we could only apply risk management principles (safety and loss control) to our employees for things like:
- Keep your hand out of the machine;
- Don’t drive too fast and be careful in adverse weather conditions;
- Handle chemicals safely;
- Tie yourself off when dealing with heights, etc.
Outcome of this myth: While we have done this extremely well, with i.e. Workers Compensation safety at all- time highs, we are learning by asking ourselves, “why did we stop there?”
2) I can’t influence trending health care increases – or — I do not think it appropriate (i.e.- invasion of employee privacy). This is combined with employer concerns of being able to capture positive outcomes directly related to wellness type applications.
Outcome of this myth: Businesses repeat the same benefits behaviors because they have not been taught differently. It’s likely their broker has no viable alternatives to the same old legacy renewal process. At best, there are attempts at cost compression like Referenced Based Pricing (RBP) being the most recent new idea.
So what’s the solution?
Without both cost compression and quantified risk mitigation, there is little hope –if any– of reversing rising health care costs. Historically, there was no way to combine AND measure the outcomes of the following into one clean silo:
- TPA data including all RX information;
- The impact and difference of health care Networks;
- The impact and quantified outcomes of Wellness programs;
- Finally, the pricing advantage of Re-insurers who may only want to play in a model that practices cost compression and risk mitigation at the same time.
The Starr Group spent 3 years developing WellBen, a program which incorporates all of the above, communicating, measuring and predicting outcomes we can compare year after year. This Single Silo program is a first. It finally brings a set of solutions that absolutely impact benefits costs and hence benefits premiums. The time is here to apply new thinking — and we finally can!