SELF-INSURANCE. A solution worth its weight in gold

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1 SELF-INSURANCE A solution worth its weight in gold

2 AN OPTION THAT IS OFTEN ADVANTAGEOUS Businesses who wish to do so may choose a self-insured plan for medical and dental care coverage as well as weekly benefits, which is entirely managed by AGA Benefit Solutions. By opting for this plan, the company becomes responsible for claims related to those guarantees while the risk on other guarantees (life, accidental death and dismemberment, long-term disability) is entrusted to one or more insurers. Self-insurance is a risk management technique that can often prove profitable.

3 A CALCULATED RISK In order to curb cost fluctuations for its clients, the underwriting team at AGA BENEFIT SOLUTIONs applies three important measures. The calculation of uniform monthly remittances: these remittances correspond to the theoretical premium and allow for easier administrative management of the plan, calculation of cost sharing with employees and management of budget heading. Claims over a pre-established level are pooled through the purchase of a stop loss insurance. Quarterly experience reports are produced and discussed with the client to ensure the follow-up of the plan s financial evolution. POTENTIALLY INTERESTING SAVINGS In a fully insured plan, premium rates include the cost of claims, insurance tax, administrative fees, risk and profit fees for the insurer as well as a provision for expected progress of claims (inflation and increased use). Self-insurance allows doing away with the risk and profit fees and reducing administrative fees. Moreover, claims paid reflect the group s actual experience, which is often more favourable than the inflation hypothesis used by the insurer.

4 DEFERRED COSTS In an insured arrangement, premiums are also used to establish a reserve for claims incurred at the end of the period but not yet paid at the end of the year. In a self-insured plan, the cost of these incurred but not reported claims is recognized only after they are paid, which is sometimes considered a first-year saving. In reality, it is a deferred cost rather than a saving, but plan promoters often appreciate this delay. AT A GLANCE Insured plan Self-insured plan Claims Projection Actual Inflation and trend Projection Actual Administrative fees Standard Reduced Risk and profit Standard N/A Pooling of surplus claims N/A According to desired level Claims incurred but not reported Reserve Deferred cost

5 ASK FOR A PROJECTION Would you like to learn more about self-insurance? Ask your group insurance advisor at AGA to put together a projection for you. Rigorously prepared by the AGA underwriting team, it will allow you to objectively compare the concept of self-insurance with your most recent renewal. In this way, you can make an informed decision concerning the type financing that best suits your situation. ATTRACTIVE CHARACTERISTICS Self-insured plans offered by AGA BENEFIT SOLUTIONS include the same attractive characteristics as other products provided in private management, such as: Direct pay drug and dental care card. Critical illness protection. Portal for plan administrators. Members portal, including online filing of claims. Direct deposit of reimbursements. Pre-authorized withdrawal of premiums. Employee assistance program including psychological and legal support.

6 THE DIFFERENCE IN BENEFIT SOLUTIONS A leader in Québec in developing and administering tailor-made group insurance plans, AGA BENEFIT SOLUTIONS is always looking to add innovation to existing services, to better answer the needs of its clients. With offices in Québec and in Montréal, and a Québec-wide distribution network, AGA BENEFIT SOLUTIONS is always present and easily accessible for its clientele. A business operating on a human scale, AGA BENEFIT SOLUTIONS offers clients and insured persons all the services of large companies. That s the AGA difference De Maisonneuve Boulevard West, Suite 2200 Westmount QC H3Z 3C1 Delta 1 Building 2875 Laurier Boulevard, Suite 700 Québec QC G1V 2M aga.ca