Why health care insurance matters

In the United Sates, we take it as a given that employers provide employees with health care insurance. This wasn’t always the case, though. In fact, it wasn’t until the 1940’s that this employee expectation started to become a baked-in convention. 

During World War II, there was a shortage of workers due to the fact so many men and women of working age had been summoned to serve our nation in the war effort. By war’s end, this number had grown to a staggering 16 million. In addition, to combat inflation the federal government passed the 1942 Stabilization Act to limit employers’ ability to raise wages. To attract and retain employees, companies began offering health insurance. During the years following the war this practice spread. Employees eventually grew to expect employers to include health-care insurance in their package of benefits, as the practice became a standard feature of the US employment system. 

Fortunately, this new convention didn’t come without advantages to employers. In fact, as the following demonstrates it would be a win-win for both employers and employees. Employer contributions to employee health care insurance are generally tax-deductible expenses for the employer. Plus, the value of the health care insurance benefit provided to employees is not treated as taxable income. These tax advantages make it more cost-effective for employers to offer health care insurance rather than providing salaries when trying to attract and retain talent. Win-win for both parties. 

Since there is no universal health care system in the United States, access to affordable health care insurance coverage is highly valued by prospective and current employees. Providing health insurance is seen as a valuable benefit that can set a company apart from its competitors and help attract and retain skilled workers. 

Statistics pointing to the importance of employer-sponsored health care insurance are compelling. Forbes Advisor found that 40% of employers say workers leave their job to find a role that offers better employee benefits according to a 2023 survey of employed workers and employers. What’s more, respondents listed employer-covered health care as the most desired benefit when asked to list the top five benefits they want from employers. 67% of employees and 68% of employers went on to indicate employer-covered health care is the most important benefit. 

Forbes has also reported the somewhat obvious conclusion effective medical, ancillary and wellness benefits help to keep a workforce healthy, reduce absenteeism, increase morale and job satisfaction, cause staff to feel cared for and appreciated and boost overall worker productivity. Moreover, providing health care insurance to employees – and allowing team members the liberty of seeking medical care when they are ill – is simply the right thing to do for valued employees. As famed University of Alabama football coach Bear Bryant once observed, you need chickens to make chicken salad. Let’s add the fact you don’t want sick employees spreading illness to other workers. This last note becomes particularly relevant in the post-COVID workplace. 

There are also legal requirements for employers to consider when regarding employer-sponsored health care insurance. Under the Affordable Care Act (ACA), also known as Obamacare, companies with fifty or more full-time employees are required to provide affordable health care insurance to their employees. This legal obligation incentivizes companies to offer health insurance to comply with the law and avoid penalties. 

While the benefits attributable to employer-sponsored health care insurance may be obvious, it remains a complex subject requiring experience and expertise. Your trusted risk management, human capital and insurance professional can provide both. 

Chris Van Buren is a Partner, Benefits and HR Consulting Division at KMRD Partners, Inc., a nationally recognized risk and human capital management consulting and insurance brokerage firm located in the Philadelphia region serving clients worldwide. Chris can be contacted at [email protected] 


Reducing commercial property insurance costs

The commercial property insurance market is experiencing one of its most challenging times in history. Rates have risen for 20 consecutive quarters. Business owners can expect rate increases of 8% on average with some older properties or coastal properties increasing by up to 25%. 

A “perfect storm” has hit the property insurance market: 

  1. There has been an increase in catastrophic weather and natural disasters.
  2. Flood prone areas – Urban development has increased the size and frequency of flood hazards. New construction removes vegetation and soil. Grading the land surface and constructing  drainage networks increases runoff to streams from rainfall and snowmelt. Roads and buildings constructed in flood-prone areas are exposed to increased flood hazards, includinginundation and erosion. FEMA cannot update flood maps quickly enough. 
  3. Unprofitability – Insurance companies, especially re-insurers, have not been profitable. Low interest rates have not provided proper investment income, although this is starting to change with the advent of Federal Reserve consecutive rate hikes. 
  4. Re-Insurance Rates – Losses in the Ukraine-Russia conflict coupled with catastrophic weather has put tremendous pressure on re-insurance renewals. Property catastrophe reinsurance rates for loss-hit U.S. accounts saw 45% increases with some catastrophic prone accounts witnessing 100% increases on January 1 renewals.  
  5. Capacity – A pull back from insurers is not just occurring on catastrophy prone accounts. We can attest to fewer and fewer insurers wanting to take risk. Accounts with poor loss history, older buildings or frame construction are experiencing the most pressure. In the past we saw capital in the form of new entrants in the market. However, that hasn’t been the case recently, especially in the re-insurance market. 
  6. Valuation / Inflation – 40-year record high inflation; supply chain disruption; climate change; rising material costs and labor shortages are affecting reported property values. As a result, many businesses find themselves either underinsured or with large gaps in their property insurance programs. This is evidenced in a recent study of property appraisals by Kroll, which revealed that 68% of buildings valued from 2020 to 2021 were underinsured by 25% or more. 19% were underinsured by 100%. In total, close to 90% of the appraised buildings were undervalued. Insurance underwriters are running valuation reports on all submitted properties and adjusting values before quoting. In 2023 most carriers have begun adjusting rates to account for inflation, with some carriers offering scheduled limits rather than blanket limits. 

Which strategies can you deploy to lower or keep property insurance costs static? 

Loss Limit Approach - Larger spread-out property portfolios can insure to a limit of theprobable maximum loss rather than an actual total property value. As an example, a manufacturer may have 10 locations at varying values totaling $100 million, while the largest location may be valued at $30 Million. Because no single storm, earthquake, or fire is likely to destroy any two properties in one occurrence, you could reasonably purchase a policy with a loss limit of $30 Million. Caveat: This would not be a good approach if your locations are all coastal or located in the same vicinity, as a large storm or event could “take out” multiple locations. 

Reporting Values and Improvements and Betterments - Take adequate time to document proper values and any improvements performed to your building. Remember, the value is not your property’s market value. Instead, use the replacement cost of the building, taking into consideration material and labor costs, code upgrades required at the time of the loss and market conditions that might influence the availability of contractors or materials.  Additionally, be sure you receive credit for all protective features on your properties. These can include sprinkler systems, central station smoke and burglar alarms, recently inspected fire extinguishers, multiple means of egress and more. Similarly, if you’ve recently upgraded a building, replaced a roof, or obtained an updated appraisal, let your insurance broker know. 

Business Continuity Plan - When was the last time you have updated your Business Continuity Plan? Do you even have a formal plan? Do you have generators on site? Have you built a relationship with or hired a disaster recovery company to aid when large losses occur? Some companies for a small fee will provide power at the ready, workstations, server back-ups and alternative work space. 

When was the last time you’ve analyzed your business interruption limits? Are they adequate? The insurance market calls it business income coverage but it’s really loss of profits plus extra continuing expenses. I recently analyzed a company’s business interruption limit only to find they were over insured by 60% during the past few years due to revenue declines from the pandemic. 

Avoid Accepting Co-insurance or Reductions in Coverage - As property rates go higher and the economy falters it may be easy to cut coverages to reduce costs. Resist the urge. Co-insurance is your insurance company’s way of encouraging you to insure your buildings and contents and business income limits to accurate replacement value. Insurers will apply a coinsurance penalty, essentially reducing the amount they will pay for a claim if the coinsurance minimum is not met. In cases in which the property is underinsured, the insurer will reduce coverage proportionally, even if the loss is less than the limits of insurance. The carrier gets to make this determination after a loss. Make sure your broker is negotiating “agreed value” on your behalf. 

Similarly, don’t accept protective safeguard warranties, water exclusions, margin clauses, or monthly limits of indemnity. Reducing costs shouldn’t equate to reducing value. 

Increase Your Deductible - This might be common sense but ask for higher deductible options if you can afford to take on more risk. You can also raise your deductible on problem areas of your portfolio, such as wind/hail. As an example, it may be a wise choice to have an increased deductible on wind/hail if you had prior losses.  

Improve Risk Profile – Have you ever had a thermal infrared scan on your buildings? Some carriers will perform the service for free. A scan can detect “hot spots” which could mean electrical issues and stop fires before occurring.  “Cold spots” could indicate wetness or leaks. Some insurance companies offer water sensors which detect leaks (and alert your smart phone) before they occur. 

Depending on your insurance carrier, hardwired smoke detectors, central station alarms, sprinkler systems, electrical improvements, new roof and more may generate discounts of up to 25%. Of course, an ROI calculation needs to be performed to discover if the costs = longer term benefits. Some carriers refuse to quote buildings with roofs older than 20 years. 

Parametric Insurance - covers the probability of a predefined event happening instead of indemnifying actual loss incurred. Possible events are earthquake, flood, wind speed, precipitation, power outage and crop yield. A pre-agreed pay-out may occur if the parameter is reached or exceeded, regardless of actual physical loss sustained. 

For example, $10 million if a category 5 storm occurs in a defined area, or $50,000 for every millimeter of cumulative rainfall above a certain threshold. 

The threshold is usually set to align with a client’s own business continuity plan and risk tolerance.  

Parametric insurance is not designed to replace but to complement traditional insurance. It can fill protection gaps left by indemnity insurance like higher deductibles, excluded perils, dependent property coverage concerns or scarce capacity.  

Require Renter’s Insurance - For residential rental property owners – you can require a clause in the lease requiring the tenant to carry renter’s insurance.  

Bottom Line - As capacity continues to shrink and rates increase, business owners must look at other avenues to protect their hard assets and balance sheets. Once you reach a certain size and level of complexity, it’s not about rate shopping to get the best insurance for the dollars spent. By putting in a little extra time, resources and effort you should yield a better result in the long run. 

Your trusted broker who has the benefit of expertise and experience can be your valued ally. 


Brian Heun –

Brian Heun is the Sales and Relationship Manager and a Partner at KMRD Partners, Inc., a nationally recognized risk and human capital management consulting and insurance brokerage firm located in the Philadelphia region serving clients worldwide. Brian can be contacted at [email protected]. 


Weiss-Schantz insurance agency sold to Hub International

Hellertown, Northampton County-based Weiss-Schantz Agency Inc., an independent insurance agency, has been acquired by Hub International Limited, a leading global insurance brokerage and financial services firm headquartered in Chicago.

Terms of the deal were not disclosed.

Covering eastern Pennsylvania, Weiss-Schantz serves commercial insurance and municipal insurance clients. Tim Schantz Sr., president; Tim Schantz Jr., vice president; and the rest of the Weiss-Schantz team will join Hub Three Rivers in Wormleysburg, a release said.

On its website, Weiss-Schantz said it offers “a comprehensive suite of insurance solutions to protect you from the unexpected. We don’t just sell insurance. We work closely with clients to help them make important and informed decisions every day when it comes to protection and their future.”

The move will provide Weiss-Schantz with access to Hub’s resources, services and industry-leading specialists – including risk management, employee benefits, retirement and innovative technology tools – to continue growing the business.

Hub is the world’s fifth largest insurance broker, according to its website, with more than 530 offices across North America.

Paula Wolf is a freelance writer

Geisinger cited for health plans claims violations

Danville-based Geisinger is being asked to take corrective action by the state after receiving citations for a series of violations from 2015 through 2018. 

An Affordable Care Act market conduct examination by the Pennsylvania Insurance Department (PIC) found violations within claims processing primarily involving mental health and substance use disorder services by Geisinger Health Plan and Geisinger Health Options. 

Acting Insurance Commissioner Michael Humphreys said Wednesday the examinations identified violations within claims processing, including claims being denied when they should have been paid.  

These denied claims were largely processed by behavioral health vendors, until 2019, when the company brought all behavioral health operations in-house, Humphreys said. 

“The Insurance Department’s top priority is consumer protection within the marketplace, and these examinations are an opportunity for the department to ensure that companies are held to high standards and consumers are receiving the benefits to which they are entitled,” said Humphreys. “The results of the exam will see some consumers receiving restitution, as well as expected process improvements within the company.” 

 Humphreys said Geisinger was cooperative during the examination, which covers the period from January 1, 2015, to March 31, 2016, and January 1, 2017, to March 31, 2018. A second claims experience period was added because the company indicated that it made several systems changes from 2016 to 2018, including the implementation of a new medical claims processing system. 

Geisinger issued a statement in response to the citation. 

“We appreciate the opportunity to partner with the Insurance Department on opportunities to improve, which is very much aligned with Geisinger’s mission to make better health easier for the communities we serve. The review period for this most recent Market Conduct Exam dates back as far as January 2015, and we’re pleased to share that the violations cited in the report have either already been remediated or we are in the process of addressing them.”

The examination also reported additional Unfair Insurance Practices Act violations relating to unclear communications with members, maximum out-of-pocket miscalculations, and incomplete claim files, PID said. 

 In addition, the exam found mental health parity violations, as complete and timely quantitative and nonquantitative treatment limitation (QTL and NQTL) analyses were not available, nor were QTLs and NQTLs applied correctly in some plans. 

Humphrey said Geisinger hired an outside consultant in 2019 to help address mental health parity. 

The department has ordered Geisinger to take corrective action to address the violations. Claims that were incorrectly processed must be reprocessed and accurately paid with applicable interest.  

PID said the company must adjust internal controls to address required claims notifications, accuracy and clarity in its communications with members, and oversight of producer appointments and terminations. 

The company must also reprocess all claims for which incorrect visit limits or cost-sharing were applied and provide restitution to policyholders that were required to pay more than that policy allowed. The company must provide proof of payment, including applicable interest, to the department as claims are reprocessed.  

Geisinger is ordered to pay a $125,000 penalty. 

 To date, approximately 60,000 Pennsylvanian consumers have received $5.87 million in restitution as a result of the department’s ACA market conduct examinations of other major health insurers. 

 The department said it will continue to monitor and verify that Geisinger’s corrective actions have taken place, including through quarterly reporting, as well as through a reexamination process in the future.