The founder of Canadian Group Insurance Brokers (CGIB) wants insurance companies to only make amendments to group insurance contracts with adequate notice and at renewal to ensure clients know what they are buying and their employees know what they are getting.
And Dave Patriarche, who also owns Mainstay Insurance Brokerage, wants support on this from industry participants and is asking them to sign a letter he has posted online called Your Commitment to the Integrity of Group Benefits. Patriarche has also emailed the note to about 1,800 brokers, as well as insurance companies, third-party administrators, organizations such as the Canadian Life and Health Insurance Association, the Independent Financial Brokers of Canada, CALU, Advocis and managing general agencies. The letter can be found online at www.cigb.ca.
“My hope is that we can improve the integrity of the contract,” explains Patriarche, who has been a broker for more than 20 years.
He says some insurance companies have started to implement changes to benefits like travel and dental coverage, specialty drugs and wording. Doing that unilaterally, he says, basically means that the one-year contract concept is no longer in effect.
“It’s a 30-day contract and I don’t think that’s anything that anyone wants to buy.”
Generally speaking, group benefits contracts are negotiated and renewed annually, but these latest steps by certain insurers have put the validity of that process into question, he says. He gives the analogy of a client who buys a 20-year life insurance term policy. Ten years into the plan, the insurance company suddenly announces there is a newly discovered disease that it will not cover, or that it’s going to be increasing rates for the next 10 years to include the illness. Patriarche says life insurance advisors would certainly be making a big to-do if this was happening in their industry, but for some reason, he says, no one is making a big deal about the group benefits contracts changes – except him.
“I’m not against change. I’m just against change at the wrong time and in the wrong format,” he says. “You had a contract you bought for the year and they changed the terms mid-way through. And they’ve done that over and over again.”
He says contracts often stipulate that the only time a unilateral change can be made by the insurer is at renewal or when there is a government taxation or regulation change.
Patriarche has complained in the past to an insurer that attempted to make a unilateral change mid-way through the year. The employer client refused to accept the change as he was allowed under the contract. When renewal time came, Patriarche approached the client and reviewed his concerns. The client agreed and Patriarche moved the client’s firm to a different insurer.
Shortly after he sent out the letter, Patriarche heard from one insurance company saying it can’t stick to making changes just at renewal because the industry is so dynamic that amendments may come about at any time.
He acknowledges that some of the changes insurance companies put into place have been positive for employees, rather than negative, but adds that it’s still not right.
“I do put my clients first – that we educate them and make sure they understand what they’re buying. My problem is that this is a slippery slope – the more changes that go on, the more companies think it’s OK to do it. I don’t want all these contracts to end up as 30-day contracts: your rates can change every month, your benefits can change up and down every month.”
He adds that employers should know how much they have to spend on employee benefits every year and employees should know what they have for a full year without wondering if changes will be made at any time by an insurer.