Dave Patriarche, President of the group insurance firm Mainstay Insurance, has taken issue with the comments made by the Canada Life and Health Insurance Association (CLHIA) critiquing a recent report on rising drug claim costs.
Patriarche argues that the critique of the report published by Innovative Medicines Canada (IMC) lacks transparency. He says he wanted to set the facts straight in response to the comments by CLHIA President Stephen Frank.
Frank argued that insurers do not use the premium trend in the premium calculation and that IMC “made factual errors.” He adds that actual premium growth was 4.0 per cent in 2016, although the report projected the annual premium trend rate for prescription drugs at 12.06 per cent for that year.
Dave Patriarche told The Insurance and Investment Journal in an interview that insurers refuse to disclose this information. “There is no transparency. The Buck/Xerox/Compass trend surveys are all that anyone has to go by, and those numbers are the only public numbers the insurers share,” he says.
“If insurers want the proper trends reported, then they need to adjust their numbers down to an amount that is transparent and truly reflects the increases,” Patriarche says.
Premium trend certainly used in calculations
Patriarche insists that insurers certainly do use the premium trend rates and that they negotiate premiums downward with brokers. He adds that brokers often do not know the exact cost of the premium, “be it for drugs, health, dental or even overall increases.”
“Why would they maintain that the premium increases do not factor in the inflation rate, whereas all the calculations from insurers include this figure in the renewal documents that I get?” he continues.
Patriarche proudly confirms that he posts average premium increases on his website, which his clients can consult. He concedes that the figure of 4 per cent in 2016 provided by Stephen Frank is realistic and is similar to that reported on his website.
Stephen Frank also claimed that IMC failed to grasp the mechanics of the premium increases. He justified this critique by comparing the premium growth (4.0 per cent) and the increase in claims costs (4.2 per cent), pointing out that these trends follow each other closely. Dave Patriarche sees an inconsistency here.
“The tracking between claims and premiums is not at all related. If last year you paid $100 and this year you pay 110$, then it doesn’t mean that the claims have also gone up 10 per cent. It’s an oblique response that doesn’t answer the question,” he says.
Patriarche is convinced that the CLHIA’s attempt to polish insurers’ reputation has failed. “Insurers are trying to make themselves look good but they need more transparency,” he concludes.
In addition to being the president of Mainstay Insurance, Patriarche is also the founder of the Canadian Group Insurance Brokers association (CGIB). However, he says he is not speaking on behalf of the CGIB in countering the CGIB’s stance.