Tuesday, 24 May 2016
Last updated 2 hours ago
Jan 11 2011 | 11:58am ET
A survey by SKCG Group, an independent U.S. insurance broker with a worldwide hedge fund practice, shows that the hedge fund industry is paying higher health insurance premiums but getting less for the money.
SKCG surveyed 100 of its hedge fund clients with AUM between $250 million and $20 billion and discovered their premiums had increases 6% to 18% in 2010. The insurance broker attributes the higher costs to the Affordable Care Act of 2010 and to higher healthcare costs generally.
But according to David Parker, president of the employee benefits division at SKCG, while rates are “soaring” coverage “is being watered down.”
Parker says that typical of this trend is a schedule of benefits that was presented in recent weeks to a multi-billion dollar hedge fund by a large insurance carrier. This plan saw 300% year-over-year increases in out of network deductibles. Some line-items which had once been fully covered now also require deductibles. Moreover, these increases take place while services such as the maximum allowable number of home healthcare visits are being slashed in half.
Insurance companies say they must raise rates in response to rapidly-rising healthcare costs and other expenses relating to the new HRA/Patient Protection and Affordable Care Act (PPACA).
“What’s really troubling is that some insurance companies are asking for rate hikes twice in one year. That’s a huge break with tradition,” says Parker. Normally, rates are locked in for one year. “To reduce the impact of these rate hikes on their bottom line, hedge fund managers need to retain a firm that can use superior information and experience to construct fine-tuned, custom coverage and negotiate lesser increases on their behalf.”