Analysis from Studentcare, a Montréal-based insurance brokerage firm exclusively specializing in health and dental plans for students, has shown that the University of Toronto Students’ Union (UTSU) avoided paying $741,096 after changing providers.
At the union’s Board of Directors meeting on January 27, representatives from Studentcare presented a financial update on the union’s health and dental plan. After the UTSU engaged Studentcare in 2016, the firm began a competitive Request for Quotations (RFQ) process in search of a better underwriting arrangement.
As a result, the health and dental plans this year have been provided by Desjardins Financial Security using a fully-insured underwriting model. Studentcare also now provides the travel insurance and accidental death and dismemberment coverage, both of which were previously covered by Western Life, bringing a savings of $20,000.
The firm’s analysis from January 2016 revealed that the union had lost over $1.6 million from its previous health and dental plan over the course of six years.
Up until the 2015–2016 year, Green Shield Canada had been providing health and dental coverage for UTSU members and the union had not gone through an RFQ process in 12 years.
The underwriting arrangement that was put in place with Green Shield was a refund accounting system, also called retention accounting. This meant that if the total amount in premiums that UTSU members paid exceeded the amount in claims paid out by Green Shield and the administrative costs, the UTSU would be refunded the surplus. This also meant that the unions would owe Green Shield the difference if the premiums did not outweigh the costs.
Since 2010–2011, the plan has incurred massive deficits and saw only small surpluses in 2010–2011 and 2013–2014, leading to premium increases of 5–14 per cent each year. Studentcare attributes these deficits to a rising number of claims on the plan.
“This remains both absurd and irresponsible,” said UTSU Vice-President Internal Mathias Memmel, speaking on the plan’s deficits. “For me, the goal has always been to secure the best value for our members.”
Sophia Haque, who sits on the Board of Directors for Studentcare, explained in her presentation that the union’s plan with Green Shield incurred a deficit of approximately $610,000, which is higher than what was initially expected.
“Earlier projections show that… you would’ve been incurring a loss that year for about $560,000,” said Haque. “The actual loss kind of exceeded that expectation.”
In addition to the $610,000 deficit, the union had an outstanding debt of $154,050 to Green Shield in 2014–2015. The plan ran a $358,320 deficit in the 2014–2015 year and had not paid it in full, as the plan’s reserve funds were depleted.
In total, the UTSU outstanding debt to Green Shield was $741,096.53. After switching to Desjardins, the UTSU’s contract with Green Shield was terminated and the union was no longer required to pay the debt.
According to Studentcare, the competitive RFQ process also brought the union savings of approximately $2 million, and the cost of the plan is fixed for two years.
“If you had continued on the same path, nothing changed, status quo, versus how much the current premium is, that difference in premium multiplied by your student population over two years amounts to about $2 million,” explained Azim Wazeer, a Program Manager for Studentcare, during the presentation to the UTSU board. “So, that’s what we mean by you guys are saving that kind of money. That is a big deal for a plan that has seen some deficits.”
