Reply #9: ..and the characteristics of that financing model

[burythehatchet]

are the root cause of the problem:

Since the financin entities essentially operate at a 30% expense ratio <[i>regardless of the size of the premium volume, the higher that volume the more money is siphoned into profit and administration (P&A). Over the long term, it is clearly in the best interests of the financing entity to have a LARGER pool of losses, since it drives up the amount of P&A.

In the risk management business, the organizational benchmark is to "self-insure" the amount of expected losses. When you self manage the losses that are forecast to occur, you eliminate a large portion of P&A, and get a lot more for your money. The most imporant role that the financing (insurance) companies provide is marketing, for gad sakes.