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Reply #9: Nothing in there about how the companies would deal with reserves, or... [View All]

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Home » Discuss » Archives » General Discussion: Presidential (Through Nov 2009) Donate to DU
TreasonousBastard Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-01-09 10:34 PM
Response to Original message
9. Nothing in there about how the companies would deal with reserves, or...
any reinsurance they might have.

I don't know health claims are reserved, but it's pretty much standard practice in other lines to set up a a file with the anticipated claim payout. Loss ratios are calculated largely on reserves set up. This is very highly regulated by the states right now, but who knows what could change under the new law.

Reinsurance is another question-- again, I don't know how health insurers handle it, and they might keep most or all of the risk themselves, but it's common practice in other lines to lay off risk so the company doesn't go bankrupt with a huge catastrophe or series of huge claims. Reinsurance doesn't affect loss ratio, but it does affect profitability.

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