Guide for Insurance Brokers: Carving Out Employee Benefits
Carving out employee benefits from a large insurance carrier and placing them with a specialty carrier can be a strategic move. It can lead to better coverage, lower costs, and customized solutions for clients. This guide is a helpful resource to assist insurance brokers in navigating this process effectively.
Understanding the BENEFIT CARVING Strategy
Benefit Carve-Out: This involves removing specific benefits such as Accidental Death and Dismemberment (AD&D) and Critical Illness (CI) insurance from an employee benefits package provided by a large carrier and securing these benefits through a specialty carrier.
Advantages of Carving Out Benefits:
Enhanced Coverage: Specialty carriers may offer more comprehensive or innovative product options and larger benefit amounts.
Customization: Specialty carriers can tailor benefits to meet the specific needs of the client.
Cost Efficiency: Specialty carriers often provide these enhanced products at much lower rates.
Service Quality: Clients can receive better service and direct access to claims and underwriting staff with niche providers.
Steps to Implement a Carve-Out Strategy
Assess the Current Plan:
Review the existing benefits package.
Identify the specific benefits to carve out (e.g., AD&D, CI).
Evaluate the current coverage terms, costs, and performance.
Identify Specialty Carriers:
Research and shortlist specialty carriers that provide AD&D and CI insurance.
Evaluate their reputation, financial stability, and product offerings.
Consider carriers known for their expertise and service quality in these specific products.
Compare and Analyze Options:
Request quotes and detailed proposals from the shortlisted specialty carriers.
Compare the coverage, costs, and benefits with the existing plan.
Analyze the differences in terms of exclusions, limitations, and additional benefits.
Negotiate Terms:
Negotiate the terms and pricing with the chosen specialty carrier.
Ensure the new plan aligns with the client’s objectives and budget.
Implement the New Plan:
Finalize and sign contracts with the specialty carrier.
Ensure that all necessary administrative processes are in place.
Monitor and Review:
Monitor the performance of the new benefits plan.
Collect feedback from the client and employees.
Conduct periodic reviews to ensure the plan continues to meet the client’s needs.
Carving out employee benefits like AD&D and CI from a large insurance carrier and placing them with a specialty carrier can offer significant advantages. Please reach out to us if you have any questions about carving out employee benefits from your client’s existing plan.