In the early 1990s, business insurance pools were introduced in the state of California as a means to provide health and disability insurance at affordable rates to small businesses. These pools worked so well and became so popular that by the end of the decade 15 more states had adopted and implemented the idea. Going into the new millennium, several more states began to try this insurance purchasing strategy and presently most states have some form of business insurance pools options.
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Not every state allows this type of business insurance purchasing, however, and rules and regulations surrounding the qualifications of eligible businesses vary wildly from one state to another. For that reason, small business owners interested in obtaining coverage through business insurance pools should carefully examine the laws and legislation in place in their own state before making the decision to purchase a plan.
Business Insurance Pools Defined
The cost of health and disability insurance can be prohibitively expensive for small businesses that do not employ enough individuals to qualify for discounted rates. The need for insurance, however, is great and so small business owners often find themselves facing quite a dilemma, particularly if any of their employees fall into a high-risk category.
Business insurance pools offer a solution for the small business owner and their employees by:
• Allowing several small businesses to “group” together to purchase health and disability insurance plans at discounted group rates.
• Providing non-fluctuating standard rates that are not influenced by an individual company’s size or the health of its employees.
• Offering the ability to choose from several types of plans for members rather than the limited selection available with individual insurance plans.
Business insurance pools take much of the fear out of small business offering health or disability insurance to their employees. With small, individual plans, a singular serious illness such as cancer or coronary disease could cause the company’s rates to increase dramatically.
With group plans like those that larger corporations enjoy, it would require a significant amount of serious illness among many members of the group before the rates would be affected. Since small businesses employing less than 50 people typically do not qualify for group plans, business insurance pools create an affordable outlet for these businesses.
The Disadvantages of Business Insurance Pools
Business insurance pools come with a unique set of benefits and advantages. Like most things, however, they also have some distinctive disadvantages that business owners should be aware of before attempting to obtain this type of coverage. Some of these include:
1. There are no nationwide standard regulations, making it difficult to understand how different states’ plans work.
2. It can be difficult to recruit a large enough pool that would entice insurance companies to offer discounted rates.
3. Pools of different types of businesses, no matter the size of the pool, tend to be somewhat less stable than a singular corporate group. Employee turn around and business longevity are risks that insurance companies may charge a premium for.
4. Many businesses will not consider joining a business insurance pool unless there is a clear and concise choice of beneficial plans. Concurrently, choice of plans will be limited without a substantially sized pool, creating a type of catch 22 phenomenon.
Even with these potential challenges, however, business insurance pools are still the most viable option for small business that wish to offer health or disability benefits to their employees. Recruiting businesses to join the pool is simply a matter of education and comparison shopping.
Shopping for Business Insurance Pools
When the idea of business insurance pools was first implemented, options were extremely limited depending on the state, insurance providers and number of businesses aware of the pools. Today, however, the Internet offers a quick and efficient way to seek out business insurance pool plans and compare the options available. This has helped to create more competition among allied insurance providers and co-ops, improving the choices for company pools.
The best method for researching and selecting a viable business insurance pool plan is to utilize the many insurance rate comparison websites online. While these websites do not personally provide insurance coverage, their benefits include:
• Free searches for coverage based on group needs and goals
• Access to quotes from various insurance providers
• Ability to compare quotes, plans and benefits in order to make the best purchasing decision for the company
• Options to submit contact information in order to discuss plans in more detail with individual providers
Obtaining Business Insurance Pools Coverage
Offering health and disability insurance benefits to employees makes a company more attractive to qualified applicants. According to the CDC, nearly 50 million Americans are without health insurance. That is quite a large number and one that is likely to have some influence on the employment choices these citizens make. Despite the more rigid hiring process, many working Americans will seek out larger companies for employment because small companies cannot provide them with medical coverage.
By obtaining benefits through business insurance pools, small businesses can be more competitive with the larger corporations in terms of recruiting quality employees without negatively impacting their operating budget.
Choosing the wrong type of plan, however, can do more harm than good so it is important that small business owners take the time to use the comparison websites available online. A plan that seems like a good deal at first glance may end up costing more in the long term in various fees and premiums. Additionally, the level of benefits can vary significantly and the difference may not be immediately evident without researching the comparison quotes more thoroughly.
Finally, a small business should conduct due diligence regarding the prospective providers shown through this comparison website. Stability of the insurance provider is essential, as is their reputation for conducting fair and ethical business. By taking the time to compare quotes online and make an informed purchasing decision, small businesses can see a great cost savings in their insurance rates. Enter your zip code below to begin!