Bob Madden Associate Partner View Bio

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Medical health captive insurance is a different model of employee benefits, employing a shared self-insurance model promoting employee wellness and transparency in claims data. Allissa Kline of Buffalo Business First profiled Lawley’s medical captive: Lawley Proactive Health Captive and how this employee benefits model has helped deliver premium returns to companies who participate, like ConServe, who also detailed their experience participating in the Lawley captive.

When Continental Services Group Inc. decided to switch from a fully insured health plan to a self-funded plan, it did more than simply save money.

The change allowed ConServe to pull back the curtain on the healthiness of its workforce. Now the company – which collects and manages student loans and other debt – has enough information about its employees to create targeted wellness programs which should lead to fewer insurance claims.

“What this does – by having screenings and flu clinics and wellness programs – is create a culture in our company that helps put some downward pressure on claims usage,” said George Huyler, who oversees human resources for about 750 employees who work in Fairport and Cheektowaga. “We’ve been successful, especially over the past few years, with such downward pressure that we’ve actually had decreases in premiums and that’s unusual in today’s day and age.”

“What this does – by having screenings and flu clinics and wellness programs – is create a culture in our company that helps put some downward pressure on claims usage,” said George Huyler

ConServe is part of the Lawley Proactive Health Captive, a group of 15 employers in Upstate New York that have banded together to self-fund their own health insurance plans. Instead of transferring risk to third parties, the companies share the risk among themselves which means they strive to be the healthiest they can be.

The captive was created by Lawley in 2011 as part of a movement to offer more services to clients. Lawley also operates an online benefits exchange.

Bob Madden, senior employee benefits consultant, had worked at First Niagara Benefits Consulting, before joining Lawley in 2013. He views captives as a way for mid-sized and large companies to control insurance costs.

Early on, captives only made sense for very big companies, such as Coca-Cola or IBM, Madden said. But today the concept has evolved so that multiple companies of certain sizes can form a single group to negotiate better stop-loss insurance rates and fixed costs. Unlike health insurance consortiums, members of a health captive choose their own health plans and rates based on their risk profiles.

Lawley’s captive has three funding layers: a variable-cost employer level for each member company, a shared-risk level with a fixed cost that covers disease management and stop-loss protection offered by an insurance company that covers catastrophes.

“If it’s a good year, the member groups can see a pretty decent return,” Madden said. “That captive level, if there’s a surplus at the end of the year, gets returned to members. The last four years, there’s been a distribution and last year the distribution was in excess of 40 percent.”

The concept is gaining attention, especially given the perpetual rising costs of traditional health insurance plans. Lawley actively markets its captive and expects to add six companies before year=end.

“It takes a little bit of education about how this works,” Madden said. “That’s because people have been conditioned to buy insurance a certain way, so every November they go through the same shell game of looking at carriers and getting quotes. But this isn’t just plugging in one insurance carrier. It’s really a culture change that takes time to learn about and explore.”

At ConServe, premiums have remained the same for about five years, Huyler said.

“We’re all in this together,” Huyler said. “It wouldn’t do any good if one company went rogue and said, ‘all of these screenings and clinics are good for your people, but not good for us.’ We haven’t done it, but you’d be voted off the island if you’re not like-minded.”

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