Assumption of Risk
by Kelly Reed

Assumption of Risk

Over the past three weeks we’ve discussed ways for your organization to manage risk.  The first week we discussed prevention strategies, then mitigation or minimizing risks, followed by transferring risk away from your organization.  This week, we will focus on the assumption of risk or choosing to assume risk within your insurance portfolio or outside of your insurance portfolio.

What we have found through our analysis of many businesses is that most businesses will take on a significant amount of risk in one area, yet they take on very little risk in other areas of their business.  What we help them do is identify if they are risk averse or risk tolerant and then help them look through their portfolio of risk that they have and see if there is consistency within their decision making process.

An example of what that looks like:

An organization that is fully insured is an organization that has no deductible, high limits of liability and the insurance carrier pays all costs.  On the other side is an organization that is completely self-insured had limits that, in the even of a loss, paid for defense costs, expert witnesses and all payments to a plaintiff.  A captive is a good example of this.

Have you identified where you fall within the two?  Are you fully insured?  Do you take on a little risk, but what to take on more in the future and ultimately work toward that captive model?

If you identify where you are today and where you want to go in the future, you have the ability to be strategic about the assumption of risk.  This is the area most businesses get caught up in that traditional insurance cycle and start to look at things 90 days before their policy is due.  Maybe they leave things the way they have always been, but business is changing today and will continue to do so into the future especially in healthcare.  Everyday the healthcare industry is presented with new challenges, whether that is healthcare reform, employing physicians or mergers and acquisitions.  This makes it very important to review whether we are doing things the way we have always done them or are there ways to assume risk that will help the overall cost to your organization.

That’s my recommendation to you.

  1. Identify where you are today.
  2. Where do you want to be in the future?
  3. What areas do you have the ability to take on extra risk?

To learn more, contact Kelly Reed  |  906.315.7227  |

The enrollment period for 2023 individual and family health plans ended on January 15. Please contact us to determine if you qualify for a special enrollment period.

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