Group benefits carriers could be leaving money on the table or eroding persistency by relying on whole-case rate actions at renewal, according to pricing and decisioning specialist Earnix.
In a recent analysis, Earnix argues that insurers should instead assess each benefit within a case based on its individual economics, rather than applying a single blended increase across the relationship. The company said this can help carriers balance profitability, persistency, competitiveness and broker relationships when setting renewal rates.
For example, dental may be running well above its target loss ratio while life on the same case remains profitable. Pricing teams must then determine how much of an increase to apply to each benefit, while considering how the overall decision will affect the broker relationship.
That challenge becomes more complex as client relationships span life, dental, vision, disability and supplemental health, with each benefit carrying different economics, competitive pressures and retention dynamics.
Actuaries, underwriters, pricing teams and sales staff each bring expertise to the process, but these functions can operate across separate systems, spreadsheets and manual workflows. This can lead to broad rate actions and whole-case recommendations that overlook opportunities at individual benefit level.
Earnix said renewals are typically built by combining manual rating with experience rating, with credibility weighted according to block size. Claims trends and the resulting blend can vary significantly between benefits within the same case, meaning a single blended figure can mask meaningful differences in risk.
Another challenge is determining how much rate a carrier can take before additional pricing begins to outweigh the economic benefit through increased lapses. Existing processes often rely on rate action limits informed by experience, underwriting judgement and business rules, without systematically testing the potential impact on profitability and persistency beforehand.
Earnix for Group Benefits is designed to address this by combining predictive models, pricing logic and business constraints to help carriers assess profitability, persistency, competitiveness and carrier-specific rules together.
The approach can incorporate factors including durational rating, plan design, competitive positioning and the potential short- and long-term impact of pricing decisions on the portfolio.
For a case containing life, dental and vision, for example, a whole-case approach could result in a blended six per cent increase. A benefit-level approach could instead leave life unchanged, apply a larger increase to dental to address its loss ratio performance and use favourable pricing on vision to help manage broker relationships and lapse risk.
Earnix also highlights the governance challenge around renewal decisions. Pricing recommendations can be adjusted by underwriting or sales based on factors such as broker of record activity, shock lapse risk or broker discussions. When these changes take place across disconnected workflows, it can become difficult to track why a final rate differed from the original recommendation.
The Earnix approach provides a single environment in which models, assumptions, constraints and pricing decisions can be documented, while still allowing actuaries and underwriters to apply judgement where exceptions are required.
The company also argues that renewal outcomes should feed into future pricing decisions. By connecting pricing actions with outcomes such as persistency and block performance, carriers can build a feedback loop that allows renewal strategies to be refined over time.
In its analysis, Earnix said connecting pricing decisions with their outcomes can help carriers identify which strategies are delivering against profitability and persistency objectives and use those insights to inform future renewal decisions.
For group benefits carriers dealing with growing renewal volumes and increasingly complex portfolios, the approach outlined by Earnix points towards more granular renewal pricing, with individual benefits assessed within the context of the wider case.
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