With Aon, seven more ways to play it safe

December 2005
Feature Story

Ed Finkel

The CAP switched insurance brokers from JLT Service Corp. to Aon’s Affinity Insurance Services on Sept. 1 primarily because the former could provide professional liability coverage from a single carrier only in about 16 states and at decreasingly competitive rates. Now, CAP members in all 50 states will be able to purchase insurance, in some cases from a menu of possibilities. (New insurance broker nationwide, locally savvy, November 2005)

The remainder of the CAP’s member insurance offerings—which include health, life, long-term disability, long-term care, accidental death and dismemberment, Medicare supplement, and dental—have been transferred to Affinity’s healthcare division. Otherwise, the products have not changed, says Scott Kelley, senior vice president for the healthcare division.

"When an insurance program transfers, we maintain the program’s integrity by offering the same services" the prior administrator offered. "All the products are the same," he says. "We do everything they did, but hopefully a little bit better. I also expect that Affinity will provide more attentive service to CAP members."

The health, life, and other lines of insurance have "been in place for decades," says Edward P. Fody, MD, chair of the CAP Insurance Subcommittee and pathologist at Holland (Mich.) Community Hospital. "We hope to modernize the program and perhaps look at some new product areas." Unlike with professional liability insurance, he says, "there wasn’t an issue of not being able to get coverage. We think the program under our old broker wasn’t promoted adequately to our members."

Affinity’s top near-term priority is, indeed, boosting the enrollment of a program that now claims an 11 percent penetration into the CAP membership, in contrast with the more typical 20 percent for association-endorsed plans, Kelley says.

"We’re getting the marketing engine engaged," he says. "In any program you have to make sure there’s enough insureds to spread the risk—that’s the principle of insurance. We’re actively publicizing and promoting the program, to get it to grow. So that when individuals do realize covered losses, the program can sustain them."

The relatively narrow buy-in thus far concerns Dennis G. O’Neill, MD, chair of the CAP Membership Committee and pathologist at Manchester (Conn.) Memorial Hospital. "There’s a tremendous market out there: 90 percent of our membership has never taken advantage of this membership benefit," he says. "That’s what the Membership Committee sees too: Maybe we should just [market] it better."

Unlike the professional liability program, for which Aon’s Affinity will act as a broker in helping members purchase from one of various companies’ plans, the other lines of insurance each will have one dedicated carrier, and Affinity’s role will be to counsel potential policyholders on what an appropriate level of coverage might be.

New York Life provides the CAP’s group health insurance plans, term life plans, and long-term disability. The Aegon companies provide accidental death and dismemberment and the Medicare supplement coverage, and the AIG company United States Life provides the dental insurance.

All are "top-tier insurance companies," which is why the CAP and Affinity plan to stay with them, along with the simple virtue of continuity, Kelley says. "Nobody wants to get a letter saying, ’We just moved your policy from New York Life to Hartford,’ or whatever," he says. "Unless truly the new company has better rates, has a stronger product, gets you more value for your dollar."

Robert Breckenridge, MD, member of the CAP Board of Governors and pathologist at MAWD Pathology Group, North Kansas City, Mo., says some current health insurance policyholders might see increases along with the switch in brokers, but nothing out of the ordinary in today’s insurance market. "We try to adjust so that the people who are the heaviest users end up paying more of the increase than somebody who would be an infrequent user. The insurance companies do that," he says. "There have been some increases in the rates of health insurance, but that would be true with any company you go with."

Kelley says Affinity will be alert to alternative opportunities down the road. "We’re not averse to that. In fact, that’s our role," he says. "We’ll do side-by-side comparisons. The College has some pretty solid plans. Are they the cheapest plans out there? No. Are they the most expensive plans? No."

But he says Affinity wants to give members a chance to become familiar with the company first. "When the members become familiar and learn who we are and how we do it, that’s when we go out and bring in new products and entertain new configurations of existing products," he told CAP TODAY. For now, "We keep the normal administrative processes going as seamlessly as possible."

Dr. O’Neill expects Affinity will look around at some point. "Aon’s job is to find the best health insurance, the best life insurance, the best disability insurance that’s out there," he says. "New York Life has been a good vendor for the College over the years. For the most part, they do have competitive rates, and they have decent products. But the insurance market changes by the day, and I think Aon is committed to staying on top of the best products out there. They’ve got relationships with all the major players."

Many members probably will continue to shop on their own, whether by surfing the Internet or contacting their own agents, to see if they can get a better deal, Kelley notes. "But at least the College is doing something proactive in making the product available to its members," he says. "It comes down to, how much shopping does that member want to do?"

Kelley and others stress that the College will not profit in any way from the arrangement. "The College receives no remuneration or royalties for this plan," he says. "It’s there for the benefit of the membership."

"That’s an important point," Dr. Fody says. "The broker is paid a commission, but there’s no profit to the CAP from this program. It’s operated exclusively as a member benefit. Every dollar that a member pays, less a very small amount for the broker’s commission, goes into the insurance program."

"The CAP makes absolutely no money from this," Dr. Breckenridge adds. "CAP is just trying to pass on the costs of this to the users. CAP doesn’t have any financial interest in it, other than a pure service to the members."

In addition to marketing, Affinity will handle underwriting, customer service, and billing, and then work with the insurance company or a subcontractor to process claims, Kelley says.

"Everybody should be risk-averse," he says. "That means you need health insurance, life insurance, disability insurance.... It’s more of a financial planning type of perspective. You always want to protect yourself against things that could impact you financially."

Ed Finkel is a writer in Evanston, Ill.