CIAB Survey Finds Group Health Rates Continue To Climb

Group medical benefits renewal rates continued to increase in the U.S. market between June and October, but brokers reported that clients are not planning to cut coverage altogether, according to a survey of insurance brokers.

The Council of Insurance Agents & Brokers (CIAB) released its November "Employee Benefits Market Survey" that asked benefit brokers what the average rate of increase in premiums on renewal was for group medical and group life compared to the last survey in May.

The vast majority of benefits consultant respondents indicated slight increases from the spring. Eighty-nine percent said prices increased for small accounts--those with 50 or fewer employees--with more than half the increases falling in the 11-20 percent range.

For medium accounts--those with 51 to 500 employees--95 percent said those accounts experienced increases, with 60 percent seeing increases in the range of 11-20 percent.

Group health premium hikes also were reported among large accounts--those with 501 or more employees. Sixty-one percent saw increases in the 6-15 percent range, with 31 percent in the 6-10 percent range and 30 percent in the 11-15 percent range.

High increases were reported, particularly for medium accounts, across all regions. Increases of 11-15 percent were reported for 38 percent of medium accounts in the Northeast; 41 percent of medium accounts in the Southeast; 71 percent of medium accounts in the Midwest; 79 percent of medium accounts in the Pacific Northwest; and 50 percent of medium accounts in the Southwest.

"Members still saw premium increases for their clients, which is frustrating for them," said Ken A. Crerar, president of The CIAB. "There is no question that the services of brokers have been in high demand since the passage of health care reform, and many are concerned about the lack of flexibility among carriers. There is a lot of confusion due to the slow or prolonged implementation schedule."

According to the survey, as small, medium and large employers have started shifting some costs to employees through higher deductibles and co-pays and increased employee shares of premium costs. Some employers also limited out-of-network options in an attempt to control the cost of group medical plans. The survey indicated that 96 percent of employee benefits consultants are "concerned" or "very concerned" that health care reform will negatively impact their group benefits revenue.

Most benefits consultants reported little or no change in group life insurance renewal rates. For 11 percent of small accounts, rates were down 1 to 5 percent, but 50 percent of accounts had no change. For medium accounts, 20 percent were down 1 to 5 percent, and another 40 percent reported no change. For large accounts, 19 percent were down 6 to 10 percent and 35 percent reported no change.