Insurance and Casinos: Does your health plan really need a Bellagio Fountain?
The basic definition of insurance is an agreement to suffer a definite small loss (the premium you pay) in order to avoid the potential of an unknown large loss (a claim). Insurance companies accept premiums from a large and diverse group of clients and the insurance company doesn’t really care who wins and who loses, as long as the winners compensate for the losers.
Insurance & Casinos
A casino provides an environment where people can come and make bets. The casino essentially reallocates the losses of some to the winnings of others (and uses statistics and probability to accurately set pay-outs). It makes an override for creating the environment. The more people placing bets, the better. A casino spends considerable sums attracting people to its environment through marketing, fancy hotels, glamour, etc.
The insurance industry is not unlike a casino. The industry reallocates money between losers and winners, and charges an override for doing so. It too spends significant sums attracting and retaining customers. The larger the overall insurance industry, the more insurance carriers can make (in an absolute sense). Like a casino, the insurance industry doesn’t actually “create” anything as all funds paid out are just funds paid in by someone else in the system. The insurance industry is essentially a large income redistribution system.
Does my Health Plan need a Bellagio Fountain?
Humans tend to be risk-averse at some level and we use insurance to mitigate that volatility. However, insurance tends to ramp up our fears and too many of us insure against small claims that we could easily afford to cover ourselves. With our Group Captive options, employer can reduce expenses by eliminating the equivalent of the fountain outside the Bellagio.
In addition, a group captive is akin to a group of employers creating their own casino. The group determine who gets in and the payouts and the group keeps the override typically charged by the insurance industry. This creates immediate cost savings, transparency and financial incentive for long term cost containment.
Is a Group Captive right for my organization?
Learn more about group captives and alternative premium funding here http://www.camlife.com/alternative-funding-solutions/ and call us for a feasibility study.