Insurance - sharing risk?
Logic and Angle #1 - "get more" with less as we understand it..
We pay car insurance (into a system - Allstate, State Farm etc), where if something goes wrong, then the system will compensate for the lost.
If one doesn't pay into the system, then it is the money saved. If one loses, then he gets nothing from the system. It becomes a balance act of risk management question, will you be able to collect enough fee into the system to cover the management fee, damage payout, and keep some profit.
Setting the fee or premium for someone get into the system is fairly predicable.
The property damage - the typical cost of vehicle on the road, or replacement costs $50,000 for luxury cars, $25,000 for typical car (even a brand new - salvage value).
The physical liability is difficult to compensate, but auto insurance cap the coverage to a low as $3,000 per person/incident, or minor injury. If the auto policy for physical liability can be expensive, when the medical bills can be a life-time payout.
Logic and Angle #2 - "gain access" to a lower cost/control as we understand it..
Costco made most of its earning from membership dues, not from the merchandise. Costco will not markup more than 15% of any products, and we know we are not going to overpay for any product (or actual cost plus 15%).
If Costco is the insurance company, Costco will decide which doctor's service will be put on the shelf, and at what price. The Costco members buy services from the doctor for a known fixed price or actual cost for the "office space, assistance, software, insurance, etc etc".
We pay car insurance (into a system - Allstate, State Farm etc), where if something goes wrong, then the system will compensate for the lost.
If one doesn't pay into the system, then it is the money saved. If one loses, then he gets nothing from the system. It becomes a balance act of risk management question, will you be able to collect enough fee into the system to cover the management fee, damage payout, and keep some profit.
Setting the fee or premium for someone get into the system is fairly predicable.
The property damage - the typical cost of vehicle on the road, or replacement costs $50,000 for luxury cars, $25,000 for typical car (even a brand new - salvage value).
The physical liability is difficult to compensate, but auto insurance cap the coverage to a low as $3,000 per person/incident, or minor injury. If the auto policy for physical liability can be expensive, when the medical bills can be a life-time payout.
Logic and Angle #2 - "gain access" to a lower cost/control as we understand it..
Costco made most of its earning from membership dues, not from the merchandise. Costco will not markup more than 15% of any products, and we know we are not going to overpay for any product (or actual cost plus 15%).
If Costco is the insurance company, Costco will decide which doctor's service will be put on the shelf, and at what price. The Costco members buy services from the doctor for a known fixed price or actual cost for the "office space, assistance, software, insurance, etc etc".
