Every October, the renewal letter arrives. Same envelope. Same letterhead. This year you’re up 28%. Your broker shopped it. You sit at your desk, do the math, and you sign. You always sign.
In video two of the Fortress Balance Sheet series, I makes a simple argument: the renewal letter is not a quote. It’s a tax. The carrier isn’t pricing your risk. They’re pricing the largest number they believe you will tolerate without leaving.
The fix is two moves. First, self-fund the plan, the way Walmart, Boeing, Google, Amazon, and the hospital system that bought your competitor’s practice already do. Second, layer a captive insurance company on top of the self-funded plan. The captive holds the stop loss. The captive owns the underwriting margin. Every dollar that used to be carrier profit lands on a balance sheet you own.
I’ll talk you through the math at three scales:
25 doctors ($2.5M annual benefits spend): roughly $30M of owned capital by year 20.
250 doctors ($25 to $30M annual spend): $300 to $400M by year 20.
25,000 doctors ($2.5 to $3B annual spend): one of the largest insurance balance sheets in the United States, owned by the physicians who generated the premium.
I try and answer the obvious objection (what about a bad year?), explains why physician groups specifically have not made this move (broker incentives, not intelligence), and closes with the clause buried in your fully insured contract that 99.9% of physicians don’t know about: a 30 to 45 day cancellation provision. You don’t have to wait for October.
Watch the full video below.
-Rojas out.
