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How did Spaggregate Originate?

The ideas for Spaggregate arose originally from a desire to come up with a better way to successfully underwrite low benefit (i.e., $2-10,000 maximum) plans utilizing some form of stop-loss contract. While a traditional aggregate might be written on such a program, it would not allow for a spread of risk that was satisfying either from an actuarial view (profit stability), a risk-takers view (profit potential), or an MGUs view (reward/work ratio). Once Spaggregate was developed with the use of appropriate legal resources it could be applicable to single employer ERISA trusts, it was recognized that it was an ideal vehicle to replace traditional stop-loss in many situations. In other words, it was a weapon with much broader potential usage than restricting it to limited benefit programs where the maximum cost is 10-15% less than traditional stop loss.

Read more about our Approval Criteria .

Please also read our Underwriting Guidelines and our Claims Reporting procedures to better understand this program.


Advantages & Disadvantages of Spaggregate

To the TPA:

Spaggregate offers TPAs a competitive edge in total cost comparison in a market where much attention is paid to major increases in maximum cost that are occurring on a more frequent basis. In a mundane commodity environment, Spaggregate is a new package that avoids the divide-and-conquer attacks on traditional stop-loss components such as the specific deductible, aggregate factor, and the different premium elements. Spaggregate allows the TPA to be more proactive and creative in benefit consulting services since things such as low benefit options are now more attractive to the stop-loss carrier. TPAs find additional benefit in the fact that there is no filing specific and aggregate claims. Perceived disadvantages to the TPA include the fact that the plans must be situated in one particular place. TPAs are likely to lose some leverage with their local banks mainly because they will not be allowed to maintain the employer bank accounts locally. Claim paying ability at the TPA will be monitored and managed in a more detailed way, similar to the manner in which first-dollar fully-insured TPAs are reviewed and managed. Spaggregate monthly flow of funds requires TPA hold funds in a way that has not been typical under standard specific and aggregate stop-loss products.

To the Employer:

Spaggregate's main advantage to the employer is that the maximum cost of a budgeted self-funded plan is lower. Along with that, employers find that the flexibility of plan design is enhanced as compared with standard stop-loss products. This increase in flexibility is attributed to the simple fact that the carrier/reinsurer (risk takers) have a more direct interest in the success of such plan designs. Spaggregate's full-funding design means a well-defined budget without surprises, an obvious benefit to any business owner. Claim hassles that can occur under a traditional specific and aggregate arrangement are simplified under Spaggregate. Employers find the main limitation of Spaggregate to be the obvious fact that a much higher proportion of total costs are paid as fixed costs and the retained self-funded portion is much lower with traditional stop-loss. This set-up also means that some extra amount is being paid towards premium tax than would otherwise be the case. The full-funding requirement, while having value, may be viewed in a negative light by some employers. The total package offered by Spaggregate provides the more competitive total cost combined with the peace-of-mind obtained from a known budgeted amount without the surprises and hassles of irregular cash flow and traditional claim filing requirements. When seeking predictability of cost, competitive total cost, and flexibility of benefit design, Spaggregate is the best choice.