Treasury Board wants more emphasis on ‘prevention and rehabilitation’
The federal government expects to tender a new short-term disability contract and re-tender its long-term disability contract in the coming year – huge business opportunities for insurance companies.
© Cole Burston.
Richard Perkins is a partner and co-founder of MAP Insurance.
By Mathew Klie-Cribb
Sun Life Financial currently administers the feds’ disability plan. However, Treasury Board officials are signalling there will be significant changes coming for the plans’ 227,000 members and the company selected to run it.
The Treasury Board of Canada Secretariat paid $250 million to insure employees on the Public Service Disability Insurance Plan in 2011-12, spokesperson Kelly James said in an e-mail.
OBJ asked local disability insurance provider Richard Perkins for insights on an insurance company’s strategic thinking and how firms might court this new government business.
Mr. Perkins is a partner and co-founder of MAP Insurance, a small Ottawa-based company specializing in providing disability insurance to smaller companies that may not have an in-house human resources expert.
While MAP does not intend to bid on the upcoming contracts, Mr. Perkins said he expects the country’s largest insurance firms as well as employee benefits and group insurance providers such as Coughlin and Associates and CAPCORP to be interested because they likely have the size to meet the new contract’s demands.
Coughlin & Associates currently administers the insurance plans for the Ottawa Police Service. The company has an office where members can meet with support staff who handle their claims, which is vital in these sorts of contracts, said Mr. Perkins.
“Given the amount of people and the type of insurance we’re talking about with the federal government, there’s going to be a lot of people who are going on short-term and potentially heading into long-term disability,” he said.
So far, Canada’s largest insurance companies are reluctant to express interest until more information about the contracts is released.
Standard Life spokesman Geoffrey King said in an e-mail that “any decision to tender for the federal government’s long and short-term disability plans would only be made once we have a chance to evaluate the respective RFPs.”
A spokesperson for Manulife Financial said the company would like to review the request for proposal. Sun Life Financial did not respond to messages.
The Treasury Board of Canada announced the plans to revamp sick leave and disability plans in June in an effort to modernize the government’s outdated disability insurance plans.
The goal is to reduce absenteeism rates and provide more support to employees and emphasizing “prevention and rehabilitation.” James said the full program design has yet to be worked out, adding there is still no timetable for when new information will be released to insurance companies.
When it comes to winning the contracts when they do come out, Mr. Perkins said companies would first evaluate whether they can handle the business, and then decide how to put their best foot forward.
“I would be trying to present what we could offer in house, and that we would have the resources available to assist people and that maybe we’ve partnered with an employee assistance company like Shepell·fgi or somebody that would be able to provide resources to try to mitigate the number of people who are going to go off on long-term disability,” said Mr. Perkins.
He said disability insurance is a very specific part of the insurance industry, and while many brokers sell disability insurance incorporated into group insurance or life insurance, it’s important for everyone to have a better understanding of the underlying product.
While almost any insurance company would like to win the upcoming government contracts because it would increase the amount of people they could employ and bring some stability, there are potential downsides, said Mr. Perkins.
“The flip side of the coin is if you rely heavily on one large account, and if and whether they get up and walk away, it can be quite devastating,” he said.
“If you’ve got all your eggs in that basket and that’s the biggest account you service and they go to tender and you lose the account, it pretty much forces you to clean house.”
Big business opportunities such as these should be fairly common for insurance companies, but that is not necessarily the case, said Perkins.
“I would say that they should be going out to tender every few years, I would think not more than three,” he said.
“But truthfully, it would depend on the relationships they have and what they discover at renewal time. If everything is running smoothly, they may be less inclined to go.”