Immix Group Benefits Insight
June 2026
True or Temporary Savings? Looking Beyond the Bottom Line in Benefits Pricing
Why Price Is Dominating the Conversation
For many small and mid-sized businesses, cost pressure is real. Margins are tighter, operating costs continue to rise, and planning feels less certain than it has in years.
Benefits plans are often one of the larger expenses outside of payroll. While they are an important part of attracting and supporting employees, they are also a natural place for employers to look when reviewing costs.
As a result, more employers are reviewing their plans, asking for quotes, and taking a closer look at renewal pricing. This is something our advisors at Immix Group are helping our Client Community navigate regularly.
In many cases, the decision comes down to a single number: the total premium, or how much that number is increasing. A proposal showing meaningful savings can be compelling, but focusing on that number alone can leave important questions unanswered.
So, Where Is the Discount Coming From?
When it comes to traditional insured non-refund plans (the most common structure for SMEs), a lower proposed premium should prompt a closer look. It is important to work closely with your advisor to understand the source of the discount; the savings should be clear and explainable.
When reviewing a quote, it is important to examine:
- whether the same plan design was quoted, and if not, what is different and why. Little things that don’t seem like a big deal in the ‘fine print’ may actually have an impact on claims being paid or not.
- the rates line by line. What part of the plan is driving the reduction, for example, lower dental premiums, lower LTD rates?
- why those rates are lower, whether due to discounting, expense structure, commissions, or assumptions about future claims
Your advisor should be able to clearly explain why one carrier is meaningfully lower than another for the same group and plan. Your advisor should be able to answer specific questions such as “Why is Manulife’s LTD rate way lower than PBC’s rate, if it’s for the same group for the same proposed plan?” Or “Why are the health dental rates lower, when the claims history does not appear to support the proposed premiums?”
Looking Beyond the Quoted Rates
Beyond visible changes in rates or plan design, there are underlying pricing factors that also influence the cost. These are not always obvious in a quote, but they play a meaningful role in how premiums are set and how they change over time. These can differ between carriers or can be different depending on the relationship and arrangement the advisor has with the insurer.
Specifically, these are some reasons we would see lower pricing than current rates:
- Discounting- this means the rates are purposefully below where the competing insurer knows they should be, for a sustainable plan. This could be reflected in any benefit line, but is most clear when proposed premiums for health and dental benefits are too low to support historical claiming levels.
- Target Loss Ratio – this reflects the portion of premium available to pay claims after expenses, including commissions, carrier costs, and profit. It is typically shown as a percentage, with a higher ratio indicating more premium available for claims before reaching the break-even point. These ratios can vary between insurers.
- Credibility- this is often overlooked, but becomes evident at renewal when low claims do not translate into lower pricing. In these cases, the group’s experience only partially influences rates, with the balance driven by the insurer’s broader manual rates. This can work for or against the employer. Smaller groups tend to have lower credibility, and credibility builds over time with the same insurer.
- Carrier differences – as an example, we consistently see differences between carriers in their pooled rates with certain ones often having higher rates and others always being lower for the pooled lines. This is a reflection of many things, including market size and composition.
- Advisor arrangements- there are legitimate instances where advisors have organized lower-cost pricing blocks with major providers. In fact, the Immix Group has very long-running large block arrangements that offer lower administrative costs to employer members.
Long story short, basic due diligence on the part of the advisor and the employer is to examine proposals in detail and assess all the factors described above.
Not all Savings Work the Same Way
Once the source of the savings is understood, the next question is whether those savings are likely to last. In some cases, it reflects a real structural advantage. In other cases, it reflects timing, temporary discounting, or pricing that may correct later.
Temporary Savings come in the form of:
- rate guarantees
- renewal rate caps
- introductory pricing or virgin group pricing
- marketing discounts used to win the business (
- premiums that are obviously below claims levels for experience-rated benefits
More Sustainable Savings are derived from:
- reduced administrative expenses or a higher Target Loss Ratio
- plan design changes
- reduced commissions for the advisor
- a funding structure that is better suited to the group
These types of reductions can be useful in the short term, but they are not usually built into the long-term cost structure of the plan. Other savings are more structural in nature, can be more transparent, and may be more stable over time.
While most SMB’s operate using insured non-refund structures, for the right group, a change in funding structure such as moving to an ASO model for health and dental, can create longer-term administrative savings and a pricing structure that better reflects the actual experience of the group. ASO is not the right fit for every employer, but where appropriate, it can be a more sustainable source of savings. In the situation where a group is marketed that is under an ASO arrangement, a reduction in admin charges could be sustainable or offered as a tactic to win business.
So the real issue is not whether savings are “good” or “bad.” It is whether they are understood, whether they fit the employer’s goals, and whether there is a reasonable expectation as to whether they will hold up over time.
When Does Taking a Discount Make Sense?
Short-term reduced pricing is not always the wrong choice. There are situations when taking an attractive price today may be a reasonable strategic decision, including:
- cash flow constraints
- a transition period for a growing business
- a broader reset of the benefits plan
- situations where there is clear understanding that pricing may increase later, along with financial readiness for that adjustment
It’s worth noting that employees who share in the cost of benefits via payroll deduction can be impacted if rates reduce, but then surge once the first renewal occurs. So if the strategy is to accept reduced pricing that may not hold up past the first renewal or two, that should be done knowingly and with a plan.
What are some common mistakes SMB employers make when switching providers?
There are a few mistakes we see regularly when employers review competing pricing:
- choosing based solely on total premium
- assuming discounts are sustainable, and they’ve got a ‘cheaper carrier’
- not asking where the savings are coming from
- not reviewing the underlying pricing assumptions and factors
- treating quotes as directly comparable without validating what is actually driving the rates
However, there is more to the decision than price alone, and lower pricing often involves trade-offs that should be understood.
Beyond Price: Other Factors That Matter
Price is one factor among several competing priorities. A lower premium may still not be the best overall outcome if it comes with trade-offs in other important areas such as:
- stability and predictability
- employee experience
- administrative efficiency
If an employer is considering a move based largely on price, it is worth investigating whether the proposed carrier can provide similar or better value in areas such as:
- carrier service and responsiveness
- technology and claims systems
- ease of administration, including whether key functions can be handled online
- breadth of available coverage and ancillary services
- advisor expertise and support
These differences are not always obvious in a quote, but they affect the user experience day to day. Carriers can vary in service, claims turnaround, technology, and ease of administration. Things like mobile apps, online tools, and support experience all contribute to how the plan feels for both employers and employees, and are worth considering alongside price.
Changing your provider, or making a switch to your advisor too?
If the advisor is also changing, that deserves its own due diligence. Price may get attention first, but the advisor relationship with providers, quality of ongoing advice and support often has a significant impact on the long-term success of the plan. Your advisor should play a key role in your benefits experience! If they’re not making things easier for you, it may be time to look around.
Bottom Line: The Role of an Advisor
This is where the role of an experienced advisor matters. A knowledgeable advisor should:
- understand the mechanics behind benefits pricing
- be able to break down where savings originate
- distinguish between temporary and more sustainable pricing factors
- help align plan decisions with the employer’s business goals
- consider all factors of any potential carriers, including scope of platforms, ancillary offerings and service
Taking a discount is a strategy decision. Lower pricing can make sense, but only when the source of the savings and the potential trade-offs are clearly understood. The right choice is the one that aligns with the employer’s goals.
Benefits pricing review
Wondering whether the savings are real?
If a renewal increase or competing quote has raised questions, Immix can help you look beyond the total premium. We review the pricing source, plan design, coverage trade-offs, service model, and renewal risk so you can make a clearer decision.
- Pricing source
- Coverage trade-offs
- Renewal risk
Key Takeaways:
- Total premium does not tell the full story
- Lower pricing should always be explained in detail
- Not all savings are built to last
- Plan design, service, and experience matter alongside price
- The right decision is informed and intentional, not just the lowest cost
FAQs
1. Why are benefit quotes sometimes much lower?
Lower pricing can come from discounts, different assumptions, or changes in plan design or expenses.
2. Does a lower premium always mean better value?
No. Lower cost may involve trade-offs in coverage, sustainability, or service.
3. Will the savings last over time?
Not always. Some savings are temporary and may adjust at future renewals.
4. What should we look at besides price?
Coverage details, claims experience, service quality, and administration tools all matter.
5. How do we know if the pricing is reasonable?
Your advisor should clearly explain where the savings are coming from and whether they are likely to hold.
Related guidance
Read More
Continue with related Immix resources on disability coverage, employee benefits, and provider changes.
Lindsay Byrka, CFP® BA, BEd
Vice President, Immix Group: An Employee Benefits Company
A Suite 450 – 888 Dunsmuir St. Vancouver V6C 3K4
O 604-688-5262
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