It is always with excitement that we at RGA review the results of one of our regular benchmarking surveys. One might think that after several years of conducting the same survey, results might be predictable. However, interesting and even surprising trends can frequently emerge, and the results of our most recent Group Life, LTD and Critical Illness Insurance Non-Evidence Limits/Overall Maximums survey, are no exception.
In employee benefits, non-evidence limits (NELs) refer to the highest amounts of life, long-term disability and critical illness coverage a plan participant can receive without providing medical evidence. Overall maximums refer to the highest available monthly benefit amounts plan participants can receive if they provide medical evidence.
NELs (sometimes also referred to as non-evidence maximums, or NEMs) as well as overall maximums are important elements in group benefit policies, as they impact how policy benefits are priced, the quote’s overall competitiveness, and even the group’s experience. Indeed, when existing or new groups submit their Request for Proposals, a frequent request is to quote the highest possible NELs and overall maximums.
High NELs and overall maximums can benefit groups in two ways. They permit as many employees in a group as possible to receive a full benefit without needing to provide medical evidence. As benefit amounts are generally determined by salaries, higher NELs also mean more members can receive full benefits over the course of several salary increases before being required to submit medical evidence for sufficient cover.
However, higher NELs and overall maximums can also mean more risk to carriers. The higher the NELs, the higher the likelihood that an employee group’s substandard risks do not have to submit medical evidence to obtain full benefits.
Regardless of the current maximum (or maximums) for a given group, many carriers will offer their highest maximums to be competitive.
Since 2003, RGA Canada has been conducting periodic surveys of group carrier NELs and maximums. These surveys provide information on NEL and overall maximum trends for Canadian carriers, to help them benchmark against how other insurers set their NELs and maximums and assess how trends are evolving.
Over time, the survey’s framework has been enhanced to better reflect Canadian insurers’ actual NEL and overall maximum tables. In 2014, the reporting structure was changed to aggregate data for a range of group sizes and average certificate face amounts rather than basing it solely on total eligible life ranges, which can vary from carrier to carrier.
Our most recent survey, conducted in late 2016 with 15 participating carriers, featured further framework enhancements. More average certificate amount choices were added to basic life, LTD and CI NELs and overall maximums, and questions were added to ask participants if any were offering NELs for optional (voluntary) life and optional CI – products for which medical evidence is typically required. Larger sample case scenario sizes were also added in order to provide segment results for groups of 7,500 and 10,000 lives.
The survey found that most NELs and overall maximums are in a comparable range. A few insurers had maximums in specific categories that were outliers (much higher than the rest of the survey participants), and those responses were removed in order not to skew the results.Read More +