Finding Right Insurer Takes Time

Ariel Zakwin, founder of 45-year-old California Jewelsmiths Inc., began to worry when his health insurance premiums doubled within a month. And when the rate for his 15 employees topped $6,000, he said enough is enough.

Like many small-business owners, Zakwin began shopping around in his quest to reduce his insurance burden. Last spring, his workshop jewelers decided to buy their own policies, leaving five employees in need of coverage, including Zakwin’s daughters, Wendy and Gigi.

Trying to find coverage for a tiny group is hard enough, but Zakwin faced an added challenge: Gigi Zakwin has interstitial cystitis, a painful and chronic bladder inflammation that requires her to be under a doctor’s care.

The Zakwins turned to James Lawson, an independent insurance broker in Beverly Hills, who persuaded Blue Cross of California to write the Zakwins a policy under the insurer’s small-group access plan.

“When you get down to five or six employees, it becomes real tricky,” said Lawson, who specializes in finding coverage for closely held businesses. But having seen Gigi at work, he knew her condition was not disabling. “When you know somebody personally, it helps quite a bit in dealing with the insurance carriers.”

Gigi Zakwin said Lawson’s persistence paid off. Although they pay $1,622.50 a month for health insurance, the premium hasn’t gone up since April, and the Zakwins hope to keep the policy in effect for a long time.

Insurance industry experts say the small-business health insurance crisis has reached its peak.

“We have hit the worst and it will get better,” predicted Mark Weinberg, executive vice president of Blue Cross of California’s consumer services group.

Weinberg said insurance companies created the current crisis for small-business owners by focusing on providing coverage for larger, healthier groups of workers at the expense of the smaller companies.

“Industrywide, 35% of all applications for small-business health insurance are turned down, and that is even when the business owners have money in hand,” Weinberg said.

But he and other close observers said insurers are slowly realizing that they have a responsibility to cover small businesses and must change their attitudes.

As a result, some insurers have slowed rate hikes and at least two major firms have dropped the practice of declaring certain industry groups ineligible for coverage. Some companies blacklisted law firms, for example, on the grounds that their employees would be more likely to sue.

Even with some 1,700 insurance companies doing business in the United States, finding the right coverage for your firm takes research and persistence.

“My advice to the small-business owner is to talk to an independent agent or broker,” said Robert Bland, president of Quotesmith a Palatine, Ill., company that tracks rates offered by 210 health insurance companies across the country as well as other kinds of insurance carriers.

“It is a jungle out there, and people don’t realize that there are huge price differences between companies for the same insurance coverage,” he said.

Six years ago, Bland was selling insurance and feeling increasingly frustrated by the lack of comparative rate information available. When he realized that no one was tracking rates, he set up his 15-person data collection firm to serve insurance brokers and insurers. Now he is considering offering Quotesmith’s rate information to the public for a nominal charge.

Many small-business owners are angry because they sign up with a company that offers an attractive initial rate only to find their rates skyrocketing six months later.

Last year, health insurance companies raised their rates an average of 25% to cope with the rising cost of health care, according to Sam Katz, president of Multiple Services, a West Los Angeles health insurance brokerage. Katz believes that with time and persistence, every small business can eventually find suitable coverage.

“Most employers feel they have to provide coverage and bite the bullet, but more and more are expecting their employees to share the cost,” said Katz, who has been in the business for 41 years.

FINDING HEALTH INSURANCE

Obtaining health insurance for your business need not be a headache. Here are some ideas:

Ask friends or associates to recommend a reputable, independent insurance broker.

Ask your employees how much they will be willing to contribute toward their own health insurance coverage.

Get quotes from several different companies on policies with both $250 and $500 deductibles.

Choose an insurance company with an A or A-plus rating from A. M. Best Co.

Discourage your employees from submitting claims for small medical bills.

Establish a wellness program and encourage employees to stop smoking, lose weight and take better care of themselves.