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I don’t think that really exists in a literal sense of “your policy has a reserve of money to pay out for you”. I think it exists in the same way social securi
by everforward 10mo ago
I don’t think that really exists in a literal sense of “your policy has a reserve of money to pay out for you”.
I think it exists in the same way social security does: money from people who pay in but don’t withdraw goes to people who do withdraw. There’s probably some reserve, but I’d guess it’s thin because withdrawals should be fairly predictable for large insurers.
- aleph_minus_one 10mo ago> There’s probably some reserve, but I’d guess it’s thin because withdrawals should be fairly predictable for large insurers. At least in the EU, by Solvency II, insurance companies are obliged to fulfill prescribed solvency ratios (i.e. have sufficient capital resources available). I would strongly assume that there exist similar regulations in the USA.
- everforward 10mo agoThere are, but I would consider them fairly thin. If I'm reading right, and I may not be, the US only requires a solvency ratio of 1.45. I never worked in health insurance, but I did work for a P&C insurance company and I believe we had assets far in excess of that but kept close to the minimum in liquid assets (returns on investing premiums we hadn't paid out yet was the majority of our profit).