Expatriate Plan Medical and Dental Renewal – Underwriting Review & Repricing an Experience Rated Plan

Expatriate Benefits Renewal

Client: Fortune-ranked Construction Company

Situation

Our existing U.S. based client asked us to review the latest renewal of their expatriate medical and dental plan with a leading international carrier. The plan covered several hundred employees across 20+ countries, and the renewal was purely based on the client’s own claim experience. Previously standard information had been provided by the carrier on claim costs, and the renewal calculations appeared to be fully transparent.

Challenge

The client was facing a renewal increase of +5% which at first glance did not seem unreasonable given medical trends. However, this still constituted a significant increase in annual premium at a time when all expenses are being heavily scrutinized. The client, therefore, wanted an expert 2nd opinion on expat medical/dental pricing methodology to see if the current plan design could be renewed at existing or even lower rates.

Approach

The Pacific Resources Global Benefits team began by requesting and reviewing more in-depth information on the historical claim experience of the client’s expats. This process identified a number of larger individual situations, and recent but uncommon claim patterns, that were not likely to repeat themselves going forward. As a result, we were able to agree with the carrier that the projected per member claims for the upcoming year were significantly less than the standard underwriting methodology previously suggested.

Pacific Resources' next step was to review all the underwriting factors beyond claims that go into a renewal rate calculation – Trend, IBNR, Network Savings Fees, Retention, Stop Loss and Local Market Partner fees/charges. These costs are often based on standard or even historical levels that are not appropriate for the client’s situation or the current expat insurance market. Our global team’s understanding of expatriate medical and dental pricing allowed us to negotiate a set of customized factors for our client based on their particular circumstances that reduced the plans ongoing expense basis.

Outcome

Due to our thorough analysis and expatriate medical/dental underwriting expertise, adjustments were made in both projected claims and the plans total required expenses. This led to the client actually realizing a reduction rather than an increase in costs at the current renewal, plus be better positioned for future renewals:  

  • 5% renewal increase became a -7.5% reduction in renewal rates
  • Result was a premium saving of several hundred thousand dollars
  • Methodology for projecting claims at future renewals was also reset
  • Expense factors to be used in future renewal calculations were reduced