Probably not an original thought...

[matt_doyle]

Are there nonprofit insurance companies?  If not, why not?  I know there are emergency funds for various subgroups of the uninsured, and I regularly see emergency fundraisers online - seems like at least one on my flist at all times - why not something more organized and permanent, a charitable insurance organization run with the same humanitarian viewpoint as microbanks like kiva or the like?

Hell, if I had the money and the know-how, I'd start one up myself.

Please, discuss.  This is something I would very much like input on.

Comments

[inaurolillium.livejournal.com]

Premera-Blue Cross is a nonprofit.

[devil]

OOPS MISFIRE

1/2 for real this time

[devil]

1/2
fskl it's hard to explain... i can imagine all the reasons why it's hard but i have trouble putting them into words and i'm also talking out of my ass but this is what i gather from working in insurance:

one, start-up. where is the money coming from? donations? from whom? can you prove the money came from where the donator said it came from with a paper trail that absolutely proves beyond the shadow of a doubt you're not dealing with laundered money? if not, then you will face trouble when you are audited. would you apply for tax exempt status -- and are you even eligible? if you are, life would be a bit easier -- but not much!!

two, employees and retention. the nature of NPO makes it unreliable and the work hours are unforgiving. you have got to have a lot of people who are willing to burn themselves out in the beginning. your operations would be funded by the item above, so you'd better be able to have enough money to cover all the costs (renting an office sutie in a building, furniture, copiers, faxes (fax line + fax machine), phones, paper), pay your employees a decent salary, and deliver on your promises to your clients. someone making less than 22k is going to go to mcdonalds because there is less stress for the same amt of money. you could forge contracts with office max, staples, etc., to cut your costs down in the longrun, but...

it's like having a wholesale membership like to costco, bj's, or whatever. it doesn't pay off if you're not using it a lot -- and in the beginning, are you really going to use it a lot? it sinks more money than it's worth. you could use a personal membership to bj's or costco to buy stuff like that in bulk but you'd better make sure it's either your personal money or keep very close track of the money you've been donated or granted. if you ever touch money given to you in the name of your NPO, you damn well better document every single thing you do and save every single receipt.

while you're at it, hire an accountant because you're never going to be able to keep up if you don't get tax-exempt status.

three, products. what are you even selling? P&C, life, health, disability, long term care? i can only see NPO working for those, because fuck if there's NPO variable life (a product dangerous in itself), options, annuities, or securities products. what is your plan? how do your products work? when will they pay out? you can't rip off other insurance companies. they will call you on it when they catch word of it. what NPO product could you draft that would benefit your client and you're able to fulfill your promises? who is smart enough to draft this product and go through the tricky legal tape and make sure your ass is covered completely in case something bad happens?

products are tricky, because "product" is not the right word to use. insurance is not selling anything tangible that people can touch. if you sell insurance at all, you are selling an idea -- and your idea better be fucking solid and set in stone, or you could lose everything you own when you get sued. speaking of that!

four, errors and omissions. E&O insurance is expensive and even as an NPO you're going to need to have it because someone out there is going to try to milk you for all you have. on top of that, you are still somewhat of a business owner if you're working with insurance and it would be foolish not to have it for an organization where someone could come back and assume you screwed them over. this is most commonly called malpractice insurance or professional liability. would your E&O cover all your employees? all of them? how are you going to pay for this?

five, prospective clients and agent candidates: how long has the NPO insurance company been around? 1-2 years? good luck getting anyone who knows what they're doing to look at you. you're a baby organization and people will regard you with distrust, especially if it's insurance.

2/2

[devil]

on top of that, what credentials will you have to prove you know what you're doing? What history do you have to rely on? What votes of confidence do you have from the public? How are you going to market yourself? Marketing is expensive and you need someone dedicated to marketing to spread your name and sell you even if you're NPO. Are you comfortable living out of a box for ten years while you establish yourself as an NPO Insurance Company? You're going to use a lot of postage and mail a lot of letters if you want to be friendly, so you'll probably want to have an agreement with the post office and buy a bulk mail machine. How are you going to put yourself in front of clients who need you? Why do you need to do this? Because if you don't, they aren't going to know how to find you. you have no name.

six, underwriters. i don't even know enough about underwriting to hazard a guess at how fucking hard it would be to get someone who knows what they're doing in the underwriter field to figure this out. your client will still need to get rated even if it's NPO unless everyone has the same standard cookie-cutter policy, which ultimately isn't good for the clients at all because everyone has different needs. they will go elsewhere to a for-profit organization where they trust they'll be better taken care of -- and there is for-profit insurance that is cheap if people shop around and look. it's just people don't know where to look half of the time.

seven, documentation and security. are you keeping this information on a computer? are you keeping it in the office? if it's on the computer, you'd better have a heavily encrypted server or else someone could hack into your server and exploit your clients' information. HIPAA is very real and very inconvenient.

potential HIPAA violation consequences as i understand them. may not be 100% correct but at least will be accurate enough to let you know this isn't something to mess with or leave yourself open for:

by accident (re: NO knowledge of HIPAA and no training about HIPAA. I just took this away from you. you officially know about it and this is a record in public showing it that could be used against you if you ever denied it at any time even if you forget. police could interrogate you and if they found this record you would then be frowned upon for lying to the police, because you knew about HIPAA but it just wasn't enough for you to remember): $100 to $50,000 per violation.

reasonable misunderstanding of the rules but knowledge of HIPAA (you now fall here): $1,000 to $50,000 per violation.

willful neglect that is corrected within an appropriate timeframe: $10,000 to $50,000 per violation.

willful neglect that is never corrected: $50,000 per violation.

oh yeah, and all that depends on how your state attorney general feels about you. people can get put in prison for violating HIPAA and HIPAA is esp relevant in health insurance -- the product NPO Insurance would work with best.

i have so many more thoughts jumbled in my head but i'm having trouble coherently putting them down. insurance is holding hands with the banks and big business. for-profit isn't a bad thing in insurance, either. just because the company itself is taking risks with their investments doesn't mean their client has to. as long as for-profit, investment-heavy insurance companies are bound by things like FINRA (and i sure as in hell hope nobody deals with brokers or firms that aren't FINRA registered), they have to be compliant and keep their promises. people don't realise how many rules and regulations we are all held to in the financial services industry and if they don't understand their policies or how they work, they need to talk to an agent and if they don't trust the agent, they need to talk to FINRA. as long as FINRA is watching over everyone's shoulders, for-profit insurance companies aren't going to cheat clients -- and if one of our agents does, we will correct it and compensate for their loss.

ugh these are all half-assed thoughts but thinking about all the details and problems with starting a NPO insurance organization makes my head spin. there is SO MUCH. SO, SO much involved. X(=-- -

Re: 2/2

[matt_doyle]

That is more than complete enough for the purposes of my 3 AM musings, XD, thanks!!

:'y

[devil]

rofl sob it was overkill for that

i just had a small heart attack when i considered what a legal nightmare a NPO insurance agency would be. i don't know for sure, but i am guessing any NPO insurance agency would have another source of revenue and that company would already be established and/or was established during a time when people were a bit more trusting.

i also think i'm "OH MY GOD" about it as i am because HIPAA is such a nightmare. i know so many things about people's medical history that could get me fired if i ever said them out loud and got caught. it's not a good industry for an absent-minded busybody like me!

i'm also tested frequently on my understanding of fraud, the compliance rules, field underwriting, and how i have to play my part in the company to catch the errors that no one else is going to catch and that my job position is important and if i don't take it seriously they'll find someone who will and etc.

that's like why i get so stressed out about it.

Re: :'y

[matt_doyle]

Actually having done some research, it looks like there are a few... but thanks for cluing me in to how much of a logistical nightmare getting anything started would be.

[devil]

:') most people's best bet would be to start their own business by involving themselves with a larger company and operating under a DBA. that's what all those little so-called mom and pop insurance shops are. they're principal, axa, metlife, progressive, state farm -- all operating under unassuming names like "MAGICAL PERSONALIZED TITLE JIM BROWN INSURANCE AGENCY"

and none of them know the paperwork nightmare involved in getting a DBA approved. none of them know my agony.

none.

hee hee sutie what a cute word

[devil]

suite*****

ugh. NPO Insurance Company is a statement that doesn't make sense either but WHATEVER you get the point