Results of Competitive Bids

Manulife will be our new insurer as of September 1, 2005. As you may know, CSI Trustees have a policy of putting out our group insurance contract for competitive bids approximately every 5 years. We waited a bit longer this time, because of all the consolidation activity that has been happening amongst the insurers. The request for proposal went out in December to every qualified group insurer, and some other claim-paying companies. On your behalf, we wanted to look at every possible alternative. The Trustees reviewed the results at their March meeting, and Manulife was their choice.
In group insurance, benefits fall into two categories. The life insurance, accident insurance and long-term disability insurance are the high risk claims, where we are part of a large pool. The premium rate is the most important issue, and Manulife has lowered our life (including optional life) and accident rates.
The health and dental benefits, on the other hand, are more stable from year to year and our rates are set to cover our own claims and expenses. The growing membership in the plan has allowed us to move to a higher level of experience-rating, and that helps reduce expenses. In this context, what we are looking for is very good administration from the insurer, to make sure the claims are paid accurately and fairly, and very low expense charges. Manulife’s expenses were below those of Sun Life, and they are guaranteed for three years.
As an aside, it is possible for any insurer to ‘low-ball’ a client in order to acquire the contract. However, the inadequate rates never last for more than a year or two, because no insurer is in business to lose money. The Trustees needed assurance that the package we were acquiring represented the lowest sustainable costs for our members. They are convinced this objective has been achieved. Lowest rates for life, accident and disability, and lowest expenses for health and dental. This is a winning combination.
Sun Life was a close second. They have served us well for many years, under the names of Mutual Life and Clarica, before the latest amalgamation. We will be sorry to part company with the many good people that we have worked with there. But, they know and we know that this contract will be rebid in the future, and they will have the chance to recapture it.
We have already started work with Manulife and Sun Life on the transition plans. Fortunately, with all of today’s technology, there should be very little disruption for you. When you get back to your schools after summer break, you will find a kit that will contain new materials for you. There will be a new drug payment card, some instructions about how to access and use the Manulife web site, instructions about where to send claims incurred before and after September 1, and, perhaps, a new plan book (there may not be enough time for this, but we will try).
Although we have agreements to duplicate almost all of our existing coverages, there are minor deviations:

  • Coverage for out-of-province emergency expenses will be available for absences of up to one year. Previously, this was two years.
  • For those in the retiree plan, the lifetime maximum benefit of $50,000 is unchanged. There will no longer be an annual reinstatement of any portion.

    • It is also likely that there will be a few small challenges in the first few months. For example, some drug that was covered by Sun may not be on Manulife’s list and will have to be added. We are working to minimize this, and hopefully it will not impact you.

    Full Issue: No. 294 - April 6, 2005

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