In my conversations with CEOs and CFOs, I often hear why our employees did not purchase the voluntary benefits that they offered at open enrollment through XYZ company. My response is, let me review your summary plan documents on your most recent open enrollment to understand your offering better.
As we all know, the pricing of insurance products may vary depending on different factors. What are some of the critical factors that make up the rate?
Total expenses are developed based on the internal expectations of commission, premium taxes, administrative costs, and overhead. The expense assumptions outlined below represent an example of a new case:
Claims Adjudication 1.75%
Commissions 15%-20%
Premium Tax 2%
Overhead 10%
Profit Margin of 8%
Loss Ratio 55-60%
Also, at the case level, expense assumptions may vary.
Click on the link below to listen to my recent conversation with @stevewatson, CFO as we discuss heaped, level, or net commissions.
