Corporate Pricing Scenarios

I understand now. Thanks for helping.

£80.37 We subtract the 12% IPT by calculating 100/112 = £89.29 We then deduct the commission of 10%, which is £8.92, leaving us with £80.37.

Ok, my maths isn’t great, so if you can help me out. I get that I need to take the IPT and commission away from the £100 before I can calculate the CLR. So, what exactly does that bring it down to?

12%

Ah ok. Remind me what is the figure for Insurance Premium Tax?

Your response...

the broker

We need to take into account the Insurance Premium Tax and your commission when calculating the CLR.

The broker is representing Far and Away travel. We've suggested an increase in their plan cost from £100 to £117. The average claim is currently £70, so we are hitting a 70% CLR already.

I can't see how you can justify this increase. I am sure this must be a mistake!

Broker challenges the renewal price

Scenario One

Ok, I hear what you are saying and I suppose that's reasonable. It is very popular amongst my staff. Thanks for taking the time to go through this with me today.

We've got to consider inflation too. Healthcare prices continue to rise.

So, I can see that does mean you need to increase your prices to make some kind of profit, but £95 feels like it is too much.

Ok, I see. So when you take the IPT away from the £80 what does that leave you with?

There are some other costs we need to factor in. Firstly, we have to take off the Insurance Premium Tax.

I appreciate what you are saying. At Simplyhealth we always work with pricing sustainability as a top priority, we will always be open and honest if an increase is necessary, in order to work with our clients long term and with the aim of building a long lasting relationship which we currently have together.

I can see that the average claim in your teams is £70. This shows that your teams really value the plan that you are offering them.

£71.43 (£80 x (100/112))

That's good news and we do get very good feedback about theplans. I don't want to have to pull them, but at the same time I can't see why the increase is so much.

Your response...

the client

The client is from Simply Crinkly Pacakging. We've suggested an increase in their plan cost from £80 per employee, to £95. The average claim is currently just over £70.

Look, you've asked me to increase the renewal cost from £80 per employee to £95. That's a pretty huge jump and doesn't seem right to me.

Client challenges the renewal price

Scenario Two

Ok, so new business pricing is down to the number ofemployees and type of funding. I guess that makes sense. I think we'll be bringing Mama Mia Pizzas on board.

That might be down to how it is funded. A flex scheme is likely to have a higher claim percentage than one that is company-funded.

That makes sense to me.But wait, I have another firm similar in size to Mama Mia and there is still a difference here.

Over 50 employees.

So just for my reference what do you class as a firm in thelarger category?

Your response...

the broker

The size of the business is a big factor in our pricing. We know that employees at smaller firms, like Mama Mia, tend to claim more than those at larger firms.

The broker has received new business quotes for two companies that are new to the market. Mama Mia Pizzas have been quoted higher than the Over Draft Banking Company.

It just doesn't seem fair, do you just make these prices up?

Broker doesn't understand new businesspricing

Scenario Three