Pricing International Exchange & Travel Plans

international exchange insurance resources

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Understanding Pricing

Understanding the pricing process is important to ensure you are paying a fair premium. It also helps in your effort to establish a stable plan for your organization.

Reports

Reports are critical to that process. The standard reports that most companies offer are:
  • Claims by diagnosis ($ paid)
  • Claims by diagnosis (# of claims)
  • Claims by type of service ($ paid)
  • Claims by type of service (# of claims)
  • Claims range
  • Reason for claim denial (this is important)
And you must make certain that the reports are not hampered by unreasonable projections – sometimes companies will inflate claims to make it look bad to competing companies. Once you have those reports, it is fairly simple to review the underwriting process. These reports should provide the info to generate a claim cost per insured. If you tabulate this information for a few years, you should be able to project an expected claim, and therefore an appropriate premium.

Benefit Ideas

It is not appropriate to discuss options without understanding each client’s needs or claims data but some options are: <
  • Consider a higher maximum (on the basis that this is pooled and a shock claim will not affect the experience)
  • Change the deductible to a co-pay, or;
  • Make the deductible per condition
  • Integrate a PPO by having a higher co-pay
Have a higher co-pay for the ER

Case Study

The attached link is an example formula we use to justify a rate from a carrier. Note that the rows that discuss pooling refers to claims that are over $50,000. These are removed from the experience as “shock claims”, but there is a charge to pool these claims. It is about 3-4%. The last row takes the final claim figure and adds in the insurance company’s margin. It does this by dividing the estimated claim per insured by the “target loss ratio”. In this situation we are looking at, the margin is 30% , so the target loss ratio is 70%.Case Study
International Association of Student Insurance Services - IASIS
Compass Benefits is the endorsed North American Broker for IASIS, the non-profit insurance & Educational Travel Confederation.