The Insurance Companies 60 cent dollar!
- September 19 2011
- Mike Schroeder
- DRP
- Comments Off
Why pay your own claim?
It is well established in risk management circles that an employer is best advised to pay those claims it can predict with reasonable accuracy. The basis for this
self evident truth is any claim paid by a third party insurer will carry far more overhead charges than one paid by the employer itself. It’s the difference
between paying claims with the employer’s 90 cent dollar versus the insurance companies 60 cent dollar. Same claim, different currency value because of the
profit and overhead charges all insurance companies apply to projected claims as compared to the real cost of self administering those claims. While a challenge certainly exists when trying to project an employer’s claims with a reasonable level of accuracy, we will proceed with this discussion assuming a reasonably accurate loss estimate is available for an employer reviewing its insurance program.