Health Insurance Online
Phone Icon
Call now to speak with a Licensed agent (866) 954-1892

Insurance Type:

Medical Insurance: What is Medical Insurance Administration? - Money and Underwriting

You may not go to the doctor very often, but it only takes one tragedy, one diagnosis of cancer, one lab visit to determine you have diabetes, and now you are faced with becoming best friends with several providers.

A system was created many years ago to help keep the cost of insurance down.

Funds were established, pools of money.

The more people who contribute to a fund, the more money there is in the fund to pay claims. As claims are paid, the amount of money in the fund is reduced.

The hope is that this pool of money has enough in it to pay for all the claims that are sent from the providers, with enough left over to pay the insurance administrator for the costs of administering your policy.

If the insurance administrator can show sound judgment when administering this policy, and show the ability to be profitable, then this insurance company may be attractive to investors.

Additional money from investors may improve how this insurance company works, which can keep costs of administration low, which in turn will lower premiums - the payment you make to have medical insurance coverage.

Insurance administrators also perform underwriting, which is another process to help keep costs in control. The purpose of underwriting is to guarantee payment by the insurance company. The underwriters will research medical history of patients to make sure the costs for care won't exceed what the insurance company or employer can afford to pay. If a patient is being treated for an ongoing condition, a pre-existing condition, payment for that condition may be excluded for a period of time. The patient may also be denied coverage by the insurance administrator if the underwriter cannot guarantee payment.

Google Plus One