Industry experts unpick the largest increase in go-to-market activity in years
Plan sponsors are continuously window shopping for their benefits, driven by cost pressures, service expectations, and evolving needs of their workforce.
"We really saw an increase in terms of go-to-market activity," said Benoit Bilodeau. "In 2024, we have seen the highest level of activity in the market compared to the last four to five years."
While switching carriers isn’t always necessary, employers are testing the market to see if they can secure better financial terms or improved service among benefits, explained Bilodeau, vice president, sales and partner experience in group insurance at Beneva.
However, despite the rise in sponsors seeking competitive offers, the actual rate of switching providers has remained steady.
"Even if we have seen that increase in 2024, we’re still at the rate of around 7 or 8 per cent of movement to another carrier," he said.
The trend isn’t universal across all business sizes, he explained, as smaller and mid-sized companies are driving most of the activity, while larger organizations, those with a thousand or more employees, are sticking with longer review cycles.
Ultimately, cost remains the number one reason plan sponsors will go to market. With providers offering aggressive financial incentives, organizations are eager to secure better pricing, he explained.
"The plan sponsor wants to make sure that they have the best financial offer," Bilodeau said. "Right now, the market is very aggressive and offers longer renewal rate guarantee periods and renewal caps."
These caps limit the extent to which premiums can increase at renewal, which has made switching carriers an attractive option for plan sponsors.
"If your experience justifies a plus fifty per cent increase, you will always be capped at what the insurer guarantees at that time of the proposal," he said.
But price isn’t the only factor. Service quality has become a major consideration as employers don’t just want affordable plans; they need seamless administration, efficient claims processing, and strong customer support.
Additionally, poor service creates internal headaches. Employees who struggle with claim approvals or slow reimbursements turn to HR for help, creating additional workload.
"Instead of partnering with someone that you are hoping you can outsource some of these questions, concerns, and need for support, it turns into an internal turmoil of trying to manage unhappy employees," said Kiljon Shukullari, HR advice manager at Peninsula.
"The level of services is now a key factor," Bilodeau said. "We've seen a lot of groups in 2024 going to market because of service issues. It’s always one of the top two or three reasons why they look for another carrier."
It’s not just about the benefits themselves, Bilodeau added, but rather, the overall experience for both plan sponsors and employees.
"It’s really about services to the insured, from customer call centres, the user experience on the website and ensuring there are no delays in payments," Bilodeau added. "We shouldn’t underestimate the service we deliver to the plan sponsor as a carrier either. It’s really a 360-degree service expectation now."
Aside from cost and level of service, plan sponsors might consider switching due to a change in leadership or acquisition or size of business, leading to changes in demographics and risk management needs, highlighted David Krieger, regional vice-president of benefits consulting at BFL CANADA.
He also pointed to technology and ancillary services as plan sponsors may switch to access better technology solutions or additional services like communication and administration.
“Technology can be a factor that would drive someone to maybe search for a more popular solution than a legacy system that’s been operating for a long time," he said.
Best practices before switching
Before making a move, organizations should first try to resolve any issues with the current provider first before considering a switch or consider alternative plan designs that may better fit the company's needs, said Krieger.
Shukullari emphasized the importance of understanding workforce demographics and expectations.
"What kind of demographic are we working with?" he said. "Some benefits providers are a lot more flexible; others might not be. Maybe you’re having a contract come to an end, and someone else with the same level of service offers a better deal. That might be another reason."
Surveying employees is also critical. If dissatisfaction with benefits is leading to turnover or internal frustrations, it may be time to explore other options.
"One reason might be you have an internal survey and if the response is negative, you take that and build a request for proposal with another provider,” added Shukullari.
When testing the market, Krieger advised companies to compare plans carefully.
"You certainly want to get an apples-to-apples comparison," he said. "The specifications should detail the particulars that are important, from plan design, contractual issues, financial management, underwriting, and claims history."
Long-term relationships with providers can also be an advantage. A strong working relationship often leads to better service and flexibility when issues arise.
"If you’ve got a long-term relationship with a business partner and have a problem, that problem is going to be solved differently than if you’ve got a one-year relationship and you’re a client who’s changed three times in the last six years," Krieger said.
“The most important way to avoid all the hassle, change and disruption is to try and have a great relationship with your supplier,” he added.
While cost, service, and technology are all valid reasons for changing providers, he cautioned against frequent switches without careful consideration.
"Companies who change insurers a lot to save some premiums will quickly find themselves without insurers to go to," Krieger said. "One should really be selective. There’s a lot of money and investment that goes into marketing both from the advisor side, the client side, and the supplier side."
While there’s no set rule for how frequently companies should re-evaluate their benefits providers, experts suggest reviewing the market at least annually to every five years.
"If you haven’t tested the market every five years, maybe you should," Krieger said. "It allows you to reaffirm that everything’s appropriate and that you’re getting the best value."
