David Parker Opalesque Industry Update - A survey by SKCG Group, an independent U.S. insurance broker with a worldwide hedge fund practice, shows that the hedge fund industry is paying higher health insurance premiums but getting less for the money. Premiums for hedge funds increased between 6% and 18% in 2010, according to a survey of more than 100 SKCG Group hedge fund clients. The higher costs are attributable to the Affordable Care Act of 2010 and higher healthcare costs generally, according to SKCG. But as premiums continue to climb, coverage has become less comprehensive. SKCG conducted the survey using proprietary, aggregated data on the health insurance premiums of a sampling of their hedge fund clients. The funds’ assets under management (AUM) range from $250 million to $20 billion, with an average AUM of approximately $2 billion. At the same time rates are soaring, the coverage is being watered down, according to David Parker, President of the Employee Benefits Division at SKCG Group. Typical of this trend is a schedule of benefits that was presented in recent weeks to a multi-billion dollar hedge fund by a large insurance carrier. This plan saw 300% year-over-year increases in out of network deductibles. Some line-items which had once been fully covered now also require deductibles. Moreover, these increases take place while services such as the maximum allowable number of home healthcare visits are being slashed in half. Insurance companies say they must raise rates in response to rapidly-rising healthcare costs and other expenses relating to the new HRA / Patient Protection and Affordable Care Act (PPACA). “What’s really troubling is that some insurance companies are asking for rate hikes twice in one year. That’s a huge break with tradition,” says David Parker. Normally, rates are locked in for one year. “To reduce the impact of these rate hikes on their bottom line, hedge fund managers need to retain a firm that can use superior information and experience to construct fine-tuned, custom coverage and negotiate lesser increases on their behalf,” Parker advised. (press release) kb |
Industry Updates
Hedge funds' health insurance premiums rise while coverage gets watered down - SKCG Group
Tuesday, January 11, 2011
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