Case Study #1

case study

Changing Advisors

Our client was previously working with a large insurer and a generalist insurance advisor with no back office/support team. The business had good claims experience, but still saw an increase in rate each year which was not justified by their claims. Unfortunately, they did not realize they were overpaying for their plan or that they weren’t protecting their employees to the extent they thought they were.

Client: Small/Medium Size Tech Business

Number of Employees: 15

Product Used: 3G

Key-Terms: 

Target-Loss Ratio (TLR): A TLR is used to determine how much of each dollar of premium spent on health and dental is available to go towards employee claims and how much goes towards admin costs to maintain the plan. For a 15 employee firm, a common TLR would be in the range of 75%. This means 75% of premium dollars go towards paying claims and 25% of premium dollars go towards health and dental costs.

Description of The Problem That The Client Needed Help Solving:

Recently, this company approached us regarding adding a Group Retirement Savings Plan to their employee benefit package, we asked for an opportunity to review their benefits plan as well. This company had been with the same benefits advisor and insurance company for 15+ years and as they had never had an employee with super high claims, their benefits plan only saw small steady increases each year. Upon review of their benefits booklet and most recent renewal information, our team was able to identify two problems that we were able to fix quickly and efficiently.


Their current advisor was a generalist who sells group benefits without having the expertise that their clients deserve. The advisor focused on personal insurance and financial planning and sold the group benefits business as an add on. Unfortunately, this company would only have figured out that their advisor had left easily fixable gaps in their coverage if they ran into high claim patterns or if an employee had gone on disability.




Problem One: 

A quick review of their plan and claims information allowed our team to see that they had low NEM’s (Non-Evidence Maximum) on their disability insurance. Most staff only had $1,500/month of disability coverage, as they had either never applied to be covered up to the maximum or they had been declined additional coverage beyond the NEM. The average salary at the company was $70,000/year, which is about $4,000/month of after tax income. If an employee became disabled, they would only get $1,500/month to live off of instead of $4,000. They would likely be unable to afford their current lifestyle and could be unable to afford their mortgage or rent payments. We will dig into our solution to fix this below.

Problem Two: 

No profit sharing/loyalty dividend! This company had consistently come in under their Target Loss Ratio and did not get any of the extra premium they “overpaid” back to their firm. In years with low claims, all of the extra premium was going back to the insurer. For example: in the last year, they only had a loss ratio of 60% and their TLR was 75%. In a case like this, the insurer normally keeps the difference as profit. 

Description of Solution That We Provided:

We implemented a two step process to efficiently solve the two problems identified above. After getting a sign off from the company’s owner, we became the agent of record on the plan (no changes at this point to their current plan design or insurer). 


By allowing HMA to become the agent of record on the case, we were able to reach out to their insurer and find further historical claims and plan information that they weren’t able to easily get for us from their current advisor.


From there we identified the key issues of the plan, specifically the NEM’s and the lost profit and brought solutions to the company's owner.


For the low NEM on disability, we let the owner know that this is likely due to the fact their group had been with the same insurer for many years. As their average salary increased, their old advisor didn’t review the case at renewal and ask the insurer to increase the NEM’s. If they didn’t want to change their insurer at this point in time, we would have been able to request a higher NEM so their employees could have significantly more disability coverage available to them. Instead we chose to move their plan to our 3G product and set them up with a $4,000 NEM as the move occurred.


Another advantage to moving to our proprietary 3G product was that they were able to enroll in its profit sharing program. 


3G gives money back to businesses in 2 ways. The first is through profit sharing, in which a portion of the premium that is paid to the insurance company for health and dental expenses can get refunded back to the client in years where claims are below the TLR. The second is through a loyalty dividend that is split among all businesses on the plan based on their yearly premiums and how long they have been on the plan.



Our client is now set up with full back office support from our comprehensive team, has sufficient NEM’s on their disability coverage and is participating in the 3G program along with 70+ other businesses.

If you want an HMA advisor to review your benefits plan or you want to learn more about the 3G profit sharing program, add your information below

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