How to Read a Carrier’s Renewal History
A first-year rate is the easiest number for a carrier to win with and the least useful one to judge by. What the carrier did to comparable groups in years two and three tells you what the quote is really worth.
Questions that expose renewal behavior
What was the renewal based on?
Ask whether the increase reflects your group’s own claims, a pooled trend, or both, and how much weight each carries.
How much is trend and how much is us?
Separate the market trend every group faces from the part driven by your own experience. Only the second part is yours to change.
What happened to comparable groups?
Ask how rate actions have gone for groups of similar size and funding, not for the book as a whole.
What happens between renewals?
Mid-year plan changes, network changes and administrative fees can move your cost without a renewal letter.
What to treat with caution
A first-year rate far below the field
Pricing well under every other carrier on the same census is a reason to ask why, not a reason to celebrate.
Rate guarantees with fine print
A guarantee that excludes plan changes or enrollment shifts may protect less than it appears to.
No willingness to discuss history
A carrier that will not talk about past renewals is telling you something.
An illustration of how this plays out
This is a composite example to show the reasoning, not a description of a specific client.
The situation
A group accepted the lowest first-year rate from a new carrier and was told at renewal that its experience had changed.
What we did
We looked at how the carrier’s rate actions had gone for comparable groups before the group moved, and asked what the first-year rate assumed.
What changed
The group learned the opening rate depended on an assumption that would not hold, and priced the move with a realistic year-two number rather than the entry price.
What a renewal history should answer
How much of the increase is trend?
Trend is what every group faces. The rest is yours and is the part you can influence.
What would the rate be with flat claims?
This isolates what the carrier is charging for pooling and margin.
What was assumed about enrollment mix?
Shifts in who enrolls move cost without a claim being filed.
What does the carrier do after a large claim?
Rate actions after one claim show how it treats a group under strain.
Questions we get
Why does renewal history matter more than year one?
Year one is the entry price. You live with the renewals for as long as you stay.
Can a broker see a carrier’s renewal history?
We look at how rate actions have gone for comparable groups and at your own history, which together show the pattern.
What if our current renewal is high?
Start with a second opinion on what the number is based on.
Can you see a carrier’s internal pricing?
No, but how it has repriced comparable groups, plus your own history, shows the pattern.
How many years should we look at?
Three years of your own history is a good minimum, and more if a large claim distorts one year.
The law behind this page.
Public Health Service Act section 2715 (42 U.S.C. § 300gg-15), Summary of Benefits and Coverage; Michigan Department of Insurance and Financial Services.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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