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Risk Management: Various Insurance Types

Introduction

The relations between human beings within the society have always been associated with danger and risk irrespective of the fact whether these are social, political, or employment relations. The progress of the mankind has resulted in the progress in the area of fighting the risks arising from these relations and led to the emergence of the concept of insurance in all its aspects. This paper focuses on the consideration of various insurance types as applied to the area of health care. The paper introduces the concepts of risk and insurance, considers different types of insurances and liability policies, and makes respective conclusions.

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Insurance

Concept

Thus, the concept of insurance is based on the notion of risk defined by Rotarius and Liberman (2000) as “the possibility that loss will occur” (p. 59). Drawing from this, Rotarius and Liberman (2000) argue that the main goal of any kind of insurance in general is “to protect against loss” (p. 59). The three categories of risk, i. e. loss or damage of property, personal injury or loss of life, and incurring legal liability, are covered by respective insurance types including workers’ compensation insurance, personal or organizational health insurance, and malpractice insurance (Rotarius and Liberman, 2000, pp. 59 – 60).

Choosing Insurance Companies and Policies

naturally, the choice of an insurance company and the acceptable insurance policies for every particular organization should be carried out in respect of the services and coverage the insurance company can provide and policies it adopts in regard to the insurer, its employees, and potential opponents in case is a risk happens (GWCI, 2009). thus, the major criteria on which the choice can be made is the provision of the largest number of insurance options, the most acceptable premium levels and payment terms, the widest coverage of the insurances offered and inclusion of either claim-made or occurrence liability, or both.

Insurance Types

Workers’ Compensation Insurance

Workers’ compensation insurance is not rather popular among the employers, but it is an obligatory condition of proper and legal functioning of any profit or non-profit entity. According to GWCI (2009), any employer in the United States is to have the workers’ compensation insurance for every employee it has, but the requirements to the insurance differ from state to state. The main advantages of the workers’ compensation insurance is the opportunity for the employer to save funds that might be incurred by unexpected health care expenses and to structure the costs of the company for employee compensation.

Liability Insurance

Liability insurance is what health care organizations must have under the laws of the United States. According to Rotarius and Liberman (2000), the liability insurance covers the risk situations for the three main liability classes including individuals employed in the area of health care, the health care organizations like hospitals and nursing homes, and organizations dealing with health care services but providing no permanent care like clinics or dispensaries (pp. 60 – 61). The ProMutual Group is one of the brightest examples of the insurance providers that offer its clients liability insurance services of all types (Boone, 2000, p. 36; ProMutual Group, 2009).

Liability Policies

Claim-made Liability Policies

One of the most important aspects of choosing an insurance company and acquiring the liability insurance is this insurance’s type according to the period of action. In other words, Boone (2000) singles out two major insurance types applied in health care area including the claim-made and occurrence liability policies (p. 37). The ProMutual Group discussed as the proper insurance company example by Boone (2000) offers both liability insurance types depending on the preferences of the customers (p. 37). The essence of the claim-made liability policy lies in the fact that the insurance becomes effective and starts covering losses of the insured company when the claim is made about the insurance case (Boone, 2000, p. 37).

Occurrence Liability Policies

The idea behind the occurrence liability policy is different as in the case when such liability insurance is selected it becomes effective as soon as the case covered by the insurance has happened (Boone, 2000, p. 37). The ProMutual Group offers this kind of liability policy as well, but Boone (2000) notes that occurrence liability policy is less effective and more dangerous for the insured company (p. 38). First of all, there might be problems with identifying the occurrence of an insurance case and controversy might be involved in identifying such cases by different persons supporting the interests of the company and another party to the insurance case. Second, the occurrence liability might be a cause of misunderstanding between the insured company and the insurance providers that often refuse to cover the intentional damage case by the insurance.

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Conclusions

Thus, it is obvious that insurance considerations are basic for the work of any profit and non-profit organization. The choice of the insurance provider should be carried out on the basis of the range of offered services and their compatibility with the company’s needs. The example of the proper insurance provider offering the wide range of insurance and liability policies in ProMutual Group, whose services are widely used in the US health care.

References

Boone, E. (2000). Challenges and solutions in medical professional liability. Rough Notes. Indianapolis,143(2), 36 – 41.

GWCI. (2009). Workers’ Compensation Insurance. Retrieved December 22, 2009, from the Guide to Workers’ Compensation Insurance. Web.

ProMutual Group. (2009). Financial Integrity, Physicians’ Loyalty. Web.

Rotarius, T. and Liberman, A. (2000). Professional liability insurance for health care organizations–several significant considerations. The Health Care Manager, Frederick: 19(1), 59 – 65.

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