Extensive Audit of Retailer’s Critical Illness Plan Results in an Enhanced Plan Design, a 61% Rate Reduction and a 60% Enrollment Jump


Client: Fortune-Ranked Retailer

Situation: Individual Cancer plan implemented in 2005. It was an event-based program which also included cancer wellness screenings, and was offered through an internal enrollment platform.

Challenge: Broaden client’s individual Cancer Insurance policy offering while improving quality and lowering rates.

Approach: In 2008, we conducted an exhaustive audit including end-to-end claim process review, claim sampling (with a 95% confidence interval and a margin of error of 5%), and an examination of the financial status of the plan and enrollment.

Key findings:

  • Paid loss ratio of 25%
  • Excessive plan expenses—in the range of 75%
  • Just 14% participation as of 1/1/09

Our conclusion: The existing individual Cancer benefit offering needed to be replaced with a competitively priced alternative that also provided enhanced coverage.

Conducting a thorough market analysis of both individual and Group Critical Illness offerings, we determined that no suitable plan existed. We developed a customized Critical Illness plan with best-in-class benefit provisions not currently being offered in the marketplace.

We released an RFP including the newly created plan design. After carrier selection, the plan was filed by carrier and approved, resulting in new market offering for Group Critical Illness. The client released plan via their internal enrollment site effective 1/1/10.

Outcome: Replaced a Cancer-only individual plan offering limited options with a Critical Illness plan providing numerous coverage options and benefits that aligned with the client’s health & welfare strategy.

Other key improvements:

  • 61% rate reduction to move from the Cancer plan to the enhanced Critical Illness plan effective 1/1/10
  • 60% enrollment increase (14% to 22% participation) from 1/1/09 to 1/1/10
  • 20% additional premium savings when plan moved from entry age to attained age effective 1/1/12

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