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Many groups, almost all smaller companies, implement fully-insured benefit plans.  As a company grows, other funding arrangements become more viable options because of the future claims experience (financial risk) can be estimated with better accuracy. for larger companies.  A carrier's general objective is to collect enough premiums to cover the cost of the claims, administration, and overhead for the same period (12 months).

A fully insured arrangement is one where the insurance company takes on all of the risk (and reward).  If the premiums collected exceed the costs, then the insurance company increases their profit.   If the premiums collected are less than the costs, then the insurance company may lose money.  But the carrier can always try to recover their losses from a bad year through their pricing of the renewal.

There are several alternative funding arrangements allowing larger companies to have more control over their risk because their claims experience has a direct effect on premium pricing.  These other arrangements allow for the company to share in the savings, and losses, for the current plan year.  These include Participating Arrangements and Self-Funding Arrangements.

For mo
re information, please contact Bridgeport Benefit Advisors.

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The material on this page is intended as general descriptions of the concepts presented.  It is for educational purposes only and it not intended to provide specific financial or tax advice.  These descriptions cannot take into account your specific conditions and situation including the data required for underwriting purposes, financial circumstances, risk tolerance, and other factors.