Fake It ’til You Make It: How to See Through Unsubstantiated Claims in the Captive Supplemental Benefits Market

By BeneRe
September 10, 2024

In the opaque world of supplemental (voluntary) benefits, new players often enter the market with bold claims and aggressive tactics. However, when it comes to making decisions that impact your employees’ financial health and well-being, it is important to look beyond the surface and dig deeper into what is being promised.

The Emergence of Supplemental Captive Solutions

While it might be tempting to be swayed by bold promises of new supplemental captive solutions, the truth is that not all programs are created equal. Promises from new captive solutions that appear innovative may lack the foundation needed to truly deliver. Without a solid foundation and a track record of proven results, those promises can often be misleading, leaving employers and employees with less than they bargained for.

This is about ensuring that your chosen provider has the substance, experience, and stability to deliver results in the long term.

Key Questions to Ask When Evaluating Providers

To protect your organization and your employees, it is crucial to ask the right questions when considering a supplemental captive insurance program. These questions can help you differentiate between providers who have built their programs on a solid foundation and those who might be offering more than they can deliver.

  • What year was your company formed?
    Longevity can be a sign of stability and experience. Providers that have been around for several years are more likely to have refined their models and proven their value over time.
  • How is your approach unique?
    Understanding what sets a provider apart can help you assess whether their model is genuinely innovative or just another version of the same offerings you have seen before.
  • How many clients do you serve, and what is the average size?
    A substantial and diverse client base often indicates that a provider has successfully managed different types of risks and needs.
  • What is your average premium savings?
    It is important to look for consistent, verifiable data that supports any claims of cost savings. Providers should be transparent about how they achieve these savings and what impact they have on coverage.
  • What percentage of employees receive improved benefits from day one?
    This speaks to the provider’s ability to deliver immediate value to your employees, which is a key indicator of their effectiveness.
  • Can you provide historical data on dividends or returns?
    Providers with a history of delivering returns to their clients can offer reassurance that their model is sustainable and beneficial in the long run.

Transparency vs. Smoke and Mirrors

Transparency is a cornerstone of any trustworthy relationship, especially when it comes to managing benefits. Employers should have clear visibility into where premium dollars are going, how claims are handled, and what quantifiable value is delivered to employees.

Without transparency, it is difficult to assess the true value of what you are being offered. Make sure your provider is open about their processes and willing to provide detailed explanations and data to back their claims.

The Importance of Asking the Right Questions

Asking the right questions is not just about getting the right answers, it is about ensuring that your provider can do what they say they will. For example, a provider that cannot clearly explain how they achieve cost savings and plan enhancements or what their historical results are might not be the best choice for your organization.

These questions are designed to help you dig deeper into the offerings of any provider and ensure that you are not just getting a good deal on paper, but a reliable, long-term partnership that benefits both your organization and your employees.

Navigating the Market with Confidence

The supplemental benefits market is filled with choices, but not all of them are equal. By focusing on the substance behind the promises and asking the right questions, you can make informed decisions that protect your organization’s financial health and support your employees’ well-being.

To help you navigate these important decisions, we have created a detailed checklist of key questions every fiduciary should ask when evaluating a voluntary benefits captive. This resource includes BeneRe’s answers for comparison and a space for your notes as you research other providers.

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