What Is an Insurance Consortium?

An insurance consortium is a group of businesses or organizations that join together to provide insurance coverage. Teaming up allows for 澳洲幸运5官方开奖结果体彩网:economies of scale and increased efficiencies since the groups that are part of the&꧋nbsp;consortium&nb💞sp;can spread out the cost of administration and obtain better discounts through volume.

Understanding an Insurance Consortium

Insurance 澳洲幸运5官方开奖结果体彩网:consortiums are found in both the private and public sectors. They allow groups that would typically self-fund or purchase 澳洲幸运5官方开奖结果体彩网:commercial policies to pool resources in order to obtain better r♏ates. 

This is especially important with 澳洲幸运5官方开奖结果体彩网:health insurance. Healthcare spending has grown rapidly for several decades, forcing companies and organizations to devote a larger proportion of their budgets to insurance, siphoning away funds that could instead be 𝓡devoted to growth drivers.

Insurance consortiums are generally governed by a 澳洲幸运5官方开奖结果体彩网:board of directors (B of D) that meet several times a year—usually quarterly. The nature of the board depends on the type of consortium. When possible, it will feature voting members from each participating business or organization, thus giving eꩵvery representative a voice.

An administrator is also usually employed, potentially from a third pa💧rty, to take care of the consort෴iums’ day-to-day functions.

Types of Insurance Consortium 

💯Insurance consortiums can come in several forms.

Fully-Insured Consortium

A fully-insured consortium purchases a contract from an insurance company that is responsible for collecting premiums and administering the plan. 

Self-Funded Consortium

A self-funded consortium, on the other hand, pools together financial resources from member organizations to cover claims. It collects premiums aꦍnd also administers the plan itself.

Example of an Insurance Consortium

A school district has faced several years of rapidly-increasing premiums and, as a result, is struggling to maintain the same level of coverage for its employees. It has the choice of continuing to spend more on insurance, cutting back coverage, or passing along the higher premiums to employees in the form of higher co-pays.

😼 Other school districts throughout the state are facing similar problems. Rather than change benefits, the school districts pool funds togethe♛r to purchase health insurance policies. 

More specifically, the Ohio Municipal League (OML) and South Central Ohio Insurance Consortium (SCOIC) formed a partnership in 2017 to create an insurance consortium. The consortium is called the South Central Ohio Insurance Consortium.

Limitations of an Insurance Consortium

There are many benefits to joining an insurance consortium, as well as a handful of caveats. A notable drawback is the risk𝐆 that a self-funded consortium finds the claims it is responsible for paying suddenly surpassing the premiums it collects.

Under this type of scenario, the consortium may register a financial loss and struggle to stay afloat. The prospect of a sharp fluctuation in claims payable means that purchasing additional 澳洲幸运5官方开奖结果体彩网:stop-loss insurance, which caps the amount the self-funded consortium is responsi❀ble for paying, is a necessary additional cost.

Another potential hindrance is a legal requirement to maintain a 澳洲幸运5官方开奖结果体彩网:reserve fund. These funds are necessary to ensure there is adequate cash on hand to cover unexpected losses. Sometimes regulators can be excess🃏ively strict, though, demanding that a seemingly unreasonable sum of money be put aside.

Special Considerations

In recent years, insurance consortiums have banded together to adopt new technologies that offer lower costs for members. One example is 澳洲幸运5官方开奖结果体彩网:blockchain. The record-keeping technology behind the Bitcoin network is capaꦉble of creating 𒀰a source of easily shareable data that is largely free from information discrepancies and the need for reconciliation.

According to Research And Markets, the market for blockchain in health insurance is expected to witness the fastest growth rate across applications, thanks to its ability to reduce IT and operational costs in insurance processes and wipe out healthcare-related frauds that cost the industry billions of dollars each year.

Doing so enables them to contain the growth of premiums through scale since they are able to spread risk over a larger number of employees. By teaming up, the school districts are also able to reduce the cost of administering the insurance plans by centralizing the procurement and monitoring processes.