If a policy holder has zero claims for a year, they should be entitled to receive half at a minimum of the premiums paid in a refund for not using the service. The insurance company didn’t spend any money on the policy holder. This should even apply to health insurance. If you only saw a dr. for an annual physical and didn’t use any other medical services you should get a refund also.
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Insurance is shared risk and shared cost. The idea is that people pay premiums which go into a pot and then if a someone encurs unexpected expenses they are re-embursed from the pot. If the insurance companies were to refund a portion of that premium for lack of use then premiums would have to go up. This is not a good idea.
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Linda’s proposal points to the confusion between insurance and pre-paid disease processing.
In my youth, insurance was for very serious - expensive - events. If you had an infection, you paid your doctor for your office visit. You paid for insurance just in case you were hit by a car. In that case, there is no way you would have paid in the amount you would be covered for.
About the time that “medical care” morphed into “health care”, the terms of the agreements changed, and included coverage for routine and minor expenses as well as relatively catastrophic coverage. This is when health maintainence organizations appeared, and doctors began working less in private practice and instead became employees of large corporations.
The individual’s routine expenses were now going through an insurance policy. Because they were handling more more money, the insurance industry was taking more profit. They loved the arrangement.
The topic reminds me of an arrangement existing at some time in Chinese history: If you became sick, you stopped paying your doctor. Those doctors were delivering health maintenance!
Today, your doctors might wish and intend to provide such - actual - health care, but the protocols they are obligated to follow commonly result in illness care.
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Skippy, I think you nailed it. Without taking in certain shared profits and spreading expected shared costs, insurance companies have little incentive to provide the service, and the industry vaccum could only be filled by nationalized services, which is would be very expensive for future taxpayers.
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Skippy and Lolly make valid points. Insurance was for emergency and catastrophic care in the past. It was also non-profit. The HMO was passed under Nixon in 1973 but was not put into effect until the mid to late 90’s. Then it took time to really infiltrate the industry. Hospital Monopolies started decades later. Most things are reactionary. So with HMOs and private practices not having enough power the Hospital Monopolies were able to negotiate contracts with insurance corporations. Whereas small business owner Doctors were destroyed by the behaviors of the insurance industry.
The entire way insurance makes money is by collecting premiums. That’s what they invest into the stock market for profit. The goal is to make investors happy.
It is risk spread:
"Risk spread is a business strategy used by insurance companies to manage potential financial losses. It involves either selling insurance policies covering the same risk over a specific period or offering a large number of policies with varying coverage across multiple areas.
By diversifying risks in this way, insurers can reduce the likelihood of facing large claims that could jeopardize their financial stability, which could occur if all their risks were concentrated in a single area…
To mitigate risk, insurers distribute insurance policies across various regions and to more people. This way, if an illness causes a surge in claims or a large claim such as for cancer in one area or for one person, the premiums collected from healthy policyholders can help offset the substantial payouts the insurer must make."