Case Studies

We’re proud of the impact we’ve had on our clients’ financial success. We value the long-term relationships we’ve built with them and we believe they feel the same.

Read on to learn more about the work we’ve done on our clients’ behalf.

Retail Client

36,000 Employees

INITIAL CLIENT ENGAGEMENT
  • We called on this customer for more than three years, believing we could reduce their current long term disability & life spend by at least 25%.
  • We were selected to complete the project after competing for the business with a firm that wanted to perform a “reverse auction”, which would maximize the pricing for the customer.
  • Despite choosing Sagewell, the customer was skeptical of our ability to deliver based on their past long-term disability claims experience.
CLAIMS ANALYSIS
  • Rather than simply bid the business, we analyzed all the components of risk and developed strategies to mitigate risk.
  • In this case, upon reviewing their long-term disability claims experience, we agreed with the client that their claims experience was very poor and would normally be calling for a significant increase.
  • Our review included an “open claims” analysis that identified high claims activity for one occupation.
  • Further analysis uncovered unusually high activity within the division from which this occupation came.
  • Findings also showed that 50% of the claims were subjective claims and 80% of the claims closed within 2 years.
  • The life insurance also showed poor experience.
OUR SOLUTION
  • Sagewell utilized a “risk segmentation” strategy to remove the poorly performing occupation from the risk pool and place the bad risk in a non-experience rated contract.
  • Within our RFP, an underwriting analysis compared the risk with and without the poorly performing occupational class. The loss ratios declined with the removal of the poor risk, resulting in a rate decrease.
  • Because the poor risk occupation consisted of young, higher paid employees, when this group was rated on their own based on their demographics versus their experience, their rates also decreased dramatically.
  • In addition, we provided options to help with the subjective claims and to try to return employees to work sooner, resulting in further savings.
  • Our absence management specialist helped the client take a closer look at possibly developing solutions to prevent disabilities in this group.
  • With regard to the life coverage, we were able to position a re-enrollment strategy for the supplemental life, which led to greater savings on the basic life.
IN SUMMARY

We were able to reduce cost by over 30% and enhance benefits. The analytic approach used could not have been achieved via a “reverse auction” or “bid” process and the client retained our firm to review their self-funded/self-administered short-term disability.

Manufacturing Client

8,000 Employees

INITIAL CLIENT ENGAGEMENT
  • In June 2009, Sagewell was engaged by a large Midwest-based manufacturing firm to conduct a review of their group life & disability programs.
  • The organization was divested from a much larger organization at the end of the previous year and had an annual spend of $5,000,000 for group disability & life benefits.
  • Because of the difficult economic environment, our client was directed by senior management to evaluate all cost savings opportunities within their benefit programs.
  • The client’s existing consultant had not reviewed their life & disability programs, as they believed the pricing and plan design were well in line with market standards since they had previously been part of an organization with more than 100,000 employees.
CLAIMS ANALYSIS
  • A comprehensive review of their claims experience, pricing, benefits levels, and funding structure was conducted and we determined that there were several opportunities for improvement.  In addition, the plans had not been reviewed against the marketplace in nearly 15 years.
  • A market review was completed and the results led to four viable carriers that should be considered as alternatives to the incumbent provider.  The incumbent was also asked to remain in the process.
  • Based on the market review, the client selected a new provider that was better aligned to partner in the management of their disability & life programs.  In addition, we were able to modify the funding structure of their short term disability program to provide more cost predictability, while still lowering their costs.
OUR SOLUTION
  • From a financial perspective, we enabled the client to reduce their direct premium spend by 48% on life insurance and 30% savings on disability.
  • Along with the savings generated from the alternate funding, the client saved $1,073,000 per year and rates were extended for three years.
  • Voluntary employee paid rates stayed the same with no disruption to the upcoming annual enrollment process.
IN SUMMARY

Sagewell was able to reduce our client’s group disability & life annual premiums by over 25% (more than $1.0M) in less than 90 days’ time, while requiring less than 30 hours of our client’s time.

Health System Client

5 hospitals, 600 employed physicians, approx. 8,000 benefit-eligible employees

INITIAL CLIENT ENGAGEMENT
  • Just prior to Sagewell’s engagement, this health system had hired a benefits consulting firm to perform an RFP for group disability & life benefits programs. The firm is well regarded for general health and welfare benefits consulting but has no specific expertise in group disability & life benefits consulting.
  • The RFP yielded marginal results with savings in the mid-single-digits and a slightly extended rate guarantee. It also resulted in the health system hiring the carrier to provide outsourced FMLA administration.
  • When we were introduced to the health system, we suggested we could achieve significantly better results. The health system was unconvinced, but agreed to give us the opportunity and so we began.
CLIENT ANALYSIS
  • As experts in group disability & life benefits consulting for large employers, Sagewell began by conducting a thorough analysis of the client’s benefits needs.
  • We utilized our scale, expertise, and innovative ideas/solutions, fully expecting to deliver better results—which we ultimately did.
  • As the FMLA outsourcing neared implementation, we participated in two discussions with the selected vendor at our client’s request. We quickly understood that the health system’s needs and expectations, and the vendor’s capabilities, were not a good match. We then conducted a full marketplace RFP to find more suitable vendors.
OUR SOLUTION
  • In roughly 60 days, with little or no disruption to the health system and its HR department, we presented our results, which were dramatic.
  • Through the effective use of the tax code, we significantly improved the income replacement program for highly compensated physicians and executives, and at a net cost savings.
  • Our absence management team identified multiple specialty vendors whose services truly met the employer’s requirements.
IN SUMMARY

Our client enjoyed additional employer savings of approximately 24% and additional extensions to the rate guarantee period.  They also were able to see significant cost savings by effectively managing income replacement costs for their highest-paid employees.  Sagewell continues to proactively analyze this and every client’s benefits plans with a level of insight and expertise few other consultants can match.