X-Message-Number: 1923
From: "Mark B. Kaminsky" <fasfax!mbk>
Subject: CRYONICS Alcor self-insurance
Date: Tue, 9 Mar 93 12:37:31 EST


> Message: #1916 - Re: Ever rising curve of expectations
> From:  (Thomas Donaldson)
> Date: Mon, 8 Mar 93 2:46:40 PST
> 
> To Mike:
> Third, you raise the possibility of self-insurance. As both of us remember,
> this issue arose several years ago, when Alcor was much smaller. At that 
> time, one of the obstacles was that Alcor would become an insurance company
> in the eyes of California law. To do that, Alcor would have to have a LARGE
> amount of money as capital, even before any insurance policies were written
> at all. Has this obstacle disappeared? Do you, or does anyone, have a plan
> to make it go away? Is there any US state or foreign nation that would let
> Alcor operate as an insurance company IN THE US with its present funding?
> Clearly Alcor now controls more money in its Suspension Fund; but it's not
> at all clear to me that the Suspension Fund would be accepted as this
> capital, or that we would want it to be.
> 
But would Alcor be considered an insurance company if it contracted to
provide just services upon death (suspension and storage) rather than
money?  Alcor could then set its fees by age and sign-up time health,
and these fees would include both the annual dues and the member's
"insurance premium".  Alcor would still need a startup pool of capital
(in case it needed to do a suspension soon after starting this plan).
There still needs to be a payout from the "insurance" pool fund to the
patient's storage fund, but this money is never part of the patient's
estate, hence not insurance but an internal accounting move.  Alcor
would likely have to get real insurance against the possibility of
having to pay for multiple suspensions at once (e.g. "The Big One" in
southern California or an Alcor convention at the World Trade Center).
The advantage of "self-insurance" is that Alcor and its members could
split the profit that the insurance company would otherwise get.  The
main disadvantage I see (assuming it can be done in a financially
sound manner) is that it binds members to Alcor just as they would be
bound to an insurance company (change in health, loss of invested
funds (whole life), and loss of youthful signup rates).  Thus members
should always have the option of using private insurance instead.

				Mark B. Kaminsky

Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=1923