Building a Benefits Program That Paid the Company Back

How a 20-year partnership transformed a manufacturing company’s benefits program into a more actively managed financial resource that reduced costs over time.

The Challenge: Growth Required a Benefits Program That Could Keep Pace

The company began as many successful businesses do—with determination, resilience and a willingness to take a risk. Two individuals, after becoming unemployed after when their employer claimed bankruptcy, decided to take their skillset and open their own manufacturing company. 

Pelorus advisor Glenn Fabello had known the family of one of the founders for years. When the company had fewer than ten employees and was beginning to grow, he identified the importance of establishing a group benefits program to help attract and retain the skilled workforce the company required.

A basic, traditional insured program was initially put in place. As the organization grew, the needs of the business and its employees evolved. The benefits program needed to evolve with them.

The Turning Point: Understanding What the Claims Experience Was Signaling

As the company grew, Glenn reviewed the claims history under the traditional insured arrangement and projected the results forward.

The analysis indicated that the company could retain more of its benefits dollars through an Administrative Services Only (ASO) arrangement, reducing costs and increasing plan flexibility.

The recommendation was designed to maintain the same level of employee coverage while changing how the program was funded and managed. Employees continued to receive the benefits they had become accustomed to, while the company gained greater transparency and control over its benefits expenditures.

The company subsequently moved to an ASO arrangement and remained with that structure for close to a decade.

The Difference: Active Management Rather Than Simply Monitoring the Plan

Under an ASO arrangement,  favourable claims experience can result in a surplus accumulating in a reserve. The insurer may then provide the option of receiving the surplus, or apply it against future premiums 

Rather than simply viewing a reserve as evidence that the plan was performing well, Pelorus used the claims experience as an opportunity to review the underlying costs and determine whether the program and cash outflow could be managed more efficiently.

When a surplus developed, Glenn returned to the carrier to negotiate lower single and family rates. Lower rates reduced the monthly premium cost and improved corporate cash flow.  

The same forward-thinking approach was applied to administration fees. Rather than accept quoted fees Pelorus negotiated a multi-year fixed cost arrangements provide greater cost certainty.

The objective throughout was straightforward: make sure the company’s benefits dollars were being used as efficiently as possible while maintaining meaningful coverage for employees.

Plan Design: Protecting the Integrity of the Benefits Program

Effective benefits management is not limited to premiums and claims costs. Plan design itself can have a significant impact on the long-term sustainability of a program.

In one instance, a review of the claims experience identified inappropriate utilization involving paramedical services and orthotics. Rather than simply accepting the claims experience and allowing the issue to continue, changes were made to the plan’s coverage and eligibility provisions.

These changes were designed to address the identified utilization, protect the integrity of the program and ensure that benefits remained available on a fair and appropriate basis to the broader employee population.

This is an important part of managing a group benefits program. The objective is not to reduce benefits unnecessarily. It is to identify areas where the plan can be structured more effectively so that it provides meaningful protection to employees while helping the employer manage avoidable costs.

The Cadence: Managing the Program Throughout the Year

A benefits program should not receive attention only when the annual renewal arrives.

Pelorus built the relationship around regular communication and ongoing review:

• Annual review: premiums, paid claims, plan performance and plan design.
• Interim review: an opportunity to identify emerging issues before they become larger problems.
• Market updates: relevant developments communicated when they arise rather than waiting until renewal.
• Industry benchmarking: comparing the program with other store fixture manufacturers across Toronto, Ontario and Canada.

Benchmarking provided another perspective for the company. When something new or different emerged within the industry, the conversation was straightforward: here is what the company currently has, here is what other organizations are doing, and here is an opportunity to consider whether a change would be beneficial.

Sometimes the company made a change. Sometimes it chose not to. The important point was that management had the information necessary to make an informed decision.

Glenn’s professionalism, responsiveness, and commitment to helping our employees and organization navigate their benefits needs have been greatly appreciated.” – Luisa L., President, Manufacturing

The Results

Over the course of the 20-year relationship, the benefits program evolved alongside the company.

The results included:

• Ongoing opportunities to reduce benefits costs: claims experience was reviewed and used to negotiate rates rather than simply accepting renewal terms.
• Greater control over benefits expenditures: the move to an ASO arrangement provided greater visibility into claims and program performance.
• Active plan management: plan design was adjusted when claims experience identified areas of inappropriate utilization or unnecessary cost.
• Employee retention: the benefits program continued to evolve as the company and its workforce grew.
• Few significant coverage gaps: over two decades, employee requests for benefits not offered under the program were rare.
• A broader advisory relationship: the relationship eventually extended beyond group benefits into personal financial planning for the owner, her husband, her children, her siblings and, eventually, her grandchildren.

The Takeaway

In 2024, the company was sold and the incoming ownership group moved the benefits program to different providers. That decision was outside the control of the outgoing leadership.

What remained within their control was how they viewed the relationship they had built over the previous two decades.

As they left the company, they took the time to write a letter expressing their appreciation:

“Over the years, [Pelorus has] been more than just a service provider, [it has] been a trusted partner who consistently demonstrated care, reliability, and dedication.”

— Luisa L., President, Manufacturing

That kind of relationship is not created by a single recommendation or one successful renewal. It develops through consistent communication, analysis, responsiveness and a willingness to look beyond the immediate issue.

A group benefits program should not be viewed simply as a fixed cost that is renewed each year. It is an important financial commitment and an important part of an organization’s employee offering.

The difference between an adequate benefits program and a well-managed one is often found in the ongoing work behind the scenes: understanding the claims experience, reviewing plan design, identifying inappropriate utilization, negotiating costs and keeping the program aligned with the needs of both the organization and its employees.

When that work is done consistently over many years, a benefits advisor becomes more than a service provider. They become a trusted partner. in managing one of the organization’s most important employee and financial programs.