Renegotiating insurance and benefits in Singapore

As we move to the end of 2015, many human resources professionals across Singapore are finding themselves in the unfamiliar, or at best irregular, position of having to arrange health insurance for their company's employees. In Singapore more than 70% of the employee benefits renewals happens in January, and this means that carriers are faced with the demand of generating quotations for brokers or agents.

Too often the job of renewing and renegotiating cover is given to staff with no previous experience of the arcane world of health insurance or the increasingly important 'carrot' of employee benefits. But sitting on the other side of the table are experienced insurers, brokers, and agents who know every trick in the book and are well used to 'negotiating' with inexperienced clients.

With management pressure to cut costs, without reducing cover, how can HR teams get the best deals out of insurance and benefits suppliers?

It's all in the preparation

When looking after your company's employee benefits programme is just one of many other responsibilities, time pressure can lead you to leave the renewal details to the last minute. We regularly see companies approach us two to three weeks before renewal deadlines with problems regarding cost, claims, and cover — right when they are running out of time.

Our advice is start earlier, particularly if your renewal is in December when the insurance market is traditionally busier. An effective timeline to follow is:

• Around three months before renewal agree your renewal objectives with your broker or agent. Are your objectives for that renewal focussing on cost, level of cover, or the performance of the insurer?

• After four to six weeks review progress, bearing in mind it can take two to three rounds of negotiation to get what you want.

• Expect final terms three to four weeks before renewal to give you chance to check the details and get management approval.

As we move towards the end of October, this process should, ideally, be underway. However, there's no time to start like the present! If this process has not started, you still have time to get moving.

Just how good is your broker or agent?

Beware of incumbent brokers and agents that provide a quote one or two weeks before renewal, giving you little time to react or find alternatives. Locally, we see this tactic from time to time, when the client is facing an increase in premiums, knowing you will have to accept the fait accompli.

A good Singapore-based broker should not be 'transactional' - they should be treating this as a partnership, and ideally will have already contacted you about the renewal process and your commercial deliverables for the next year.

Know what you want

If you have recently taken on the responsibility of looking after your company's insurance and Employee Benefits programme, there are a few key points to learn and a lot of potential support to help you deliver the benefits programme your staff deserve, and your management is willing to pay for.

Often buyers of health insurance default to price as the most important deciding factor. If you are in a low-margin commoditised industry, this might be the right answer. But if you are in a market where talent is difficult to attract and retain, a comprehensive health insurance programme can be an important talent acquisition and retention strategy. This means you need value, not just savings.

So what can you actually expect to save in the Singapore insurance market? Going into a price war with the market does not provide you with value in terms of coverage. A good number to achieve locally, in terms of cost containment, should be around 10%-15%. There are also other factors to consider like claims utilisation, member headcounts, and plan design.

Also, if your health benefits programme has high levels of administration from claims and a need to analyse those claims to mitigate rising costs, you will need good service from your broker or agent. Regular meetings and good management information are essential.

From our experience, clients need a mix of service, advice, value, and price to suit their particular needs. Knowing what you need is important in finding the right resource to help you.