The opinions expressed herein are the writer's and do not necessarily reflect the opinions of Moreton & Co.

A curious thing happened during a recent renewal. The policy being renewed was a disability benefit based on covered payroll. After marketing the policy to several carriers, my team began the usual process of analysis using spreadsheets to compare proposals. When we compared current plan costs to the proposals, it became clear that the proposals were rated differently than the incumbent's renewal. Since apples don't compare fairly with oranges, we investigated to find the cause of the difference. Eventually the discrepancy was discovered: the census of "actively at work employees" erroneously contained previously terminated employees.

This inadvertent inclusion of terminated employees for coverage impacted cost for the renewing disability policy for a few reasons. Overall demographics (age, gender, job descriptions, etc.) of the group with the terminated employees compared to the same statistics after removing the terminated employees made the group look entirely different. One key difference was the additional payroll. The incumbent carrier rated the case based on a census it had on file whereas the proposing carriers rated the case based on the incorrect census obtained from the client. Once the census was corrected, the policy was properly re-marketed, re-rated, and eventually renewed.