The central tenant of the insurance industry is that the law of large numbers drives down the average price of risk. This principle of diversification has broadly withstood the test of time in an industry that has weathered man-made and natural calamities over many centuries. Despite the resilience of the global insurance industry and its ability to equip customers with the capacity to cope with uncertainty, healthcare continues to be the domain where the industry broadly falls short. With a raft of changes afoot due to the adoption of the Patient Protection and Affordable Care Act (PPACA), combined with mega-mergers in the U.S. health insurance market, employers of all sizes can thank complexity for eroding their benefits plans while inflating operating costs.
Like most periods of market turmoil, small and mid-sized firms are particularly vulnerable…
