There’s no doubt about the fact that insurance companies of all sorts make a killing in profits, testimony to which is just how much they spend on marketing and advertising campaigns. That’s just one of the signs of their mega profitability though, but we’re going to be focussing on the health insurance industry in particular and what we’re going to explore are the peripheral elements the industry.
The premiums you pay for your healthcare insurance will perhaps never have you being satisfied with those rates, but there is no doubt about the fact that healthcare insurance has its place and comes in very handy. Never mind the greater discussion of what is essentially a system driven by greed which ultimately requires that citizens have to resort to paying out of pocket to make sure they are adequately covered as far as healthcare goes. That’s perhaps a discussion for another post altogether and perhaps even a totally different blog.
So when you pay your premiums for your health insurance, in addition to the coverage you’re primarily paying for, what else does the money you part with cover?
Administration
If we were talking about an insurance industry which uses something like block chain technology then it would be a simple matter of a direct relationship between a client and the service provider. That’s not the case though, with many other operational elements required to run the insurer’s operation as a business organisation. Admin is a huge part of that setup.
Marketing & Advertising
I’ve already mentioned marketing and advertising, but it’s worth mentioning again for emphasis, because of just how much money insurers spend on trying to acquire new clients. In the healthcare insurance market critical mass is a rather astutely phrased term.
Market research
Health insurers collectively pump billions of money into market research, part of which entails R&D, perhaps for the rather ominous reasons of being able to dictate what they’re willing to pay out for and what they refuse to pay out for, by way of medical treatments required by their clients. Moreover, they may also employ MaxDiff Analysis or similar research methods to understand, what type of client may have an interest in getting health insurance and for what particular diseases. It can help them target potential clients and improve their business marketing strategies.
Insurance for insurance
Every insurer, including those in the healthcare insurance industry, needs to have what is effectively a reserve pool of cash which the regulators can dig into should the need arise, such as if the company goes out of business and there’s effectively no money from the premiums collected to honour claims payouts.
Third-party liability
Third-party liability coverage is typically associated with auto insurance service providers, but since many insurance companies don’t just offer one specific type of insurance in isolation, pretty much all of them incorporate third-party liability coverage. If you visit a personal injury attorney Los Angeles plaintiffs often refer to as the best in the business, or one from anywhere else for that matter, the lump-sum in claims they manage to win for you comes from third-party liability insurance money. You would be the third-party in this instance, which means the insurance company of the person or company from whom you are claiming would have incorporated third-party claims as a possibility which should be accounted for in determining their premiums.
