This year, one out of ten construction workers will be accidentally injured.
Because of this statistic, insurance carriers often view the construction industry as one of the most dangerous industries, even though the employees match a more positive insurance profile and lead healthy active lives. As a result of this perception, construction companies are offered some of the highest insurance premiums.
High insurance premiums can place a strain on a company's profit margin. Human resource departments can help keep companies financially viable by finding ways to cut benefit costs without losing much-needed coverage. One way they can accomplish this is by conducting a health insurance audit. Since most carriers inflate rates based on inaccurate risk assumptions, conducting a health insurance audit can help carriers focus on the positive profiles to get a better rate.
A Positive Profile
Demographically, construction company employees tend to be attractive to carriers, yet the companies usually receive poor ratings. Construction employees are generally younger, male, athletic and in good shape. They often lead active lives-on and off the jobsite-participating in sports leagues such as softball and bowling. Some even repair or build their own houses in their free time. Simply put, construction employees are physically active people.
Construction companies are often unfairly rated because there is a perception that their employees are more likely to be injured. While on-the-job injures increase each year, outside of work they tend to lead healthy active lives, therefore lowering the risk of conditions such as diabetes, heart disease and even some forms of cancer that are linked to obesity. Carriers tend to focus on the negatives opposed to the positives of insurers that fit that profile.
A Health Insurance Audit
Carriers are going to be risk averse and profit-motivated. This is not an indictment; it is the nature of all businesses- not just the insurance industry. However, an audit of the construction business health plan will provide a clear unbiased picture of what the rates should be. Audits are a powerful tool to guard against being unfairly overcharged for insurance.
The health insurance audit takes the "subjectivity" out of the process and allows for a fair and valid re-underwriting of the group. This is extremely beneficial for companies in the construction industry, since they are often unfairly rated by demographics and lifestyle.
Also, a health insurance audit will reduce a company's health care costs without compromising employee coverage or increasing employee rates. The audit offers strategies and ideas that will lower premium costs, therefore, allowing the company to have greater control over the renewal process, via education and transferable techniques. Ultimately, an audit will benefit the employees.
For example, a Sacramento-based construction company underwent a health insurance audit and was able to reduce its dental premiums $50,000 per year, without changing its dental carrier or reducing its benefits.
The auditor found the company had been unfairly rated after scrutinizing the underwriting formulas used to determine the rate. They found that the company was being massively overcharged based on the erroneous risk assumptions made by the carrier. The auditor concluded that the rate was inappropriate by employing risk modeling software programs, underwriting savvy and actuarial analysis.
The auditor approached the carrier, and the carrier agreed to reduce the rates.
What is an Audit and How Does It Work?
Health insurance premium auditing is a third-party model for controlling the cost of health care premiums. Human resource professionals can turn to an outside source as a creative way to evaluate benefit costs and cut unnecessary expenditures without adding additional costs to the company.
An audit is a complete, unbiased "re-underwriting" of a company's healthcare benefits package. It is a thorough review of the underlying assumptions of risk made by the insurance carriers, and an examination of the underwriting formulas carriers use to set a company's premium rates. The audit process is designed to scrutinize and de-construct these assumptions and formulas.
