How Business Buys Insurance

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When it comes to selecting corporate insurance benefits, cost and reliability of claims payment are critical, executives say. Four hundred decision makers interviewed by Aragon Consulting Group, a health-care consulting firm, rated nine criteria used to select insurance coverage and carriers on a 10-point scale.

Of the respondents interviewed, who represented firms of varying size, 51 percent rated both price and reliability of claims payment a 10 or very important. Price was so important, in fact, that more than one-third of the firms in question had switched carriers because their premiums climbed too high.

Reliability of administrative services was considered very important by 42 percent of respondents, as were the doctors and nurses included in a network. Almost 41 percent cited the reputation of the insurance company, and more than 32 percent said the types of coverage offered were very important. Whether or not a carrier offered a fee-for-service plan was of less concern to employers than their previous experience with the insurance carrier.

The survey also uncovered general coverage patterns. For example, larger firms and those located in the West and Northeast were more likely to offer a variety of insurance options. One-third of all benefits packages include health maintenance organizations, 34 percent include preferred provider organizations, less than 13 percent offer point-of-service policies, and 20 percent offer traditional fee-for-service plans.

Finally, the survey found small firms are far more likely than larger firms to pay for all of their employees' health insurance. Almost 40 percent of firms with 50 or fewer employees cover all medical expenses, while only 16 percent of those with 50 to 499 employees and only 12 percent of those with 500 or more workers do so.

For more information, contact Aragon Consulting Group, Pierre Laclede Center, Suite 1100, 7701 Forsyth Boulevard, St. Louis, MO 63105; telephone (314) 726-0746 or visit

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