NAW Insurance Trust vs. Traditional Group Health Insurance
NAW Insurance Trust - February 2008
Traditional Group Health Insurance
A member (employer group) receives a quote from a health insurance carrier based on their Standard Industrial Code (SIC), location, employee demographics, medical history and plan design(s). If the member accepts the quote and purchases the insurance policy, the premium invoiced to the member represents the insurance carrier’s expenses, profit margin and estimated annual claims activity. If the member’s claim activity is worse than anticipated, the member is not required to pay any additional premium. If the claim activity is better than anticipated, the carrier keeps the difference.
NAW Insurance Trust
A member participating in the NAW Insurance Trust receives a quote from our carrier, Trustmark Insurance Company or Trustmark Life Insurance Company (Trustmark), based on the same premium determination process as indicated above. The critical difference is that Trustmark has agreed to trade part of their profit margin for greater anticipated volume, lower administrative and distribution costs obtained through NAW’s member buying power, and the utilization of our managing general agent Flexible Benefit Service Corporation (Flex).
At the end of the year, if all participating members’ claim activity was less than anticipated on a combined basis, all remaining claim dollars are placed in a Special Contingency Reserve (SCR) fund. The SCR fund is owned and controlled by the NAW Insurance Trust with the NAW Board of Directors serving as Trustees.
At the end of the year, if all participating members’ claim activity was greater than anticipated on a combined basis, the SCR fund will offset the deficit, to the extent possible. Trustmark is responsible for covering any remaining deficit. As the SCR fund grows over time, it can also be used to reduce future insurance premium increases or may be distributed to participating members, within legal requirements, in a manner deemed appropriate by the Trustees.
Member companies may use their existing agent or can be referred to an agent through Flex. The agent and Flex work together to prepare an initial insurance premium quote based on the following factors:
- SIC code
- Location(s) of employer
- Demographics of employees
- Plan designs
To learn more or to receive a quote, visit www.naw.flexiblebenefit.com or call 866.472.5397.