Credibility measures how predictable past claims experience is in determining future claims.
Larger groups have greater credibility since claims for each employee have less impact on the overall claims experience. For example, with a group of only five employees, each member represents 20% of the group, but with a group of 50 employees, each member represents 2% of the group. The greater the number of employees, the more stable, predictable, and reliable the claims experience will be; therefore, more “credible”.
Each carrier has their own formula for calculating credibility, which takes into account average number of employees by month and number of years with the carrier (to a maximum of...
Trend factors reflect the increasing cost of products and services covered under the plan. Some contributing factors used to calculate the Health and Dental rates for the upcoming renewal period include:
Trend factors are typically calculated at the block level, rather than at the group level, and applied consistently across all groups within the insurance carrier’s entire block of business.
Insurance companies use midpoint-to-midpoint trend rather than an annual trend to calculate the renewal.
Trend factors is 1 of 7 factors that influence group benefit rate adjustments.
Leave management, it can feel…complicated! Here are the top 3 challenges facing businesses today and how to get out in front of them.
Challenge 1: Effectively Tracking Employee Leave
The first challenge in leave management is effectively tracking leave requests.
The Solution: Businesses must know and understand the rules around leave, including:
Challenge 2: Effectively Tracking Employee Leave While Avoiding Payroll Errors
Leave management requires effective tracking and a dynamic payroll system. Some leaves are paid; some aren’t. Depending on your policies, you may even offer your employees both paid and unpaid leave within the same category.
For example, you...
Target loss ratio (TLR) indicates the percentage of premium dollars that are allocated to pay claims. If the TLR is 80%, this means that for every dollar of premium paid, the insurance company expects to pay out 80 cents in claims. The additional 20 cents covers: insurer administration costs, advisor commission, claims payment costs, profit charge and premium tax.
When the policyholder’s claims are in excess of the TLR, theoretically, the insurance company will need to increase their rates. When the claims are lower than the TLR, they are charging too much and should be able to lower them. This, however, depends on how credible the claims experience is.
TLR is 1 of 7 factors that influence group benefit rate adjustments.