In doing some research for one of our clients, JoAnna came across an entity called, Positive Physicians Insurance Company. That prompted her to ask me if there’s a Negative Physicians Insurance Company. It’s a fair question. And I imagine there must be.
It seems to me Negative Physicians Insurance Company would cover things like doctors who go to work in chronically bad moods. They might write policies for surgeons whose operations are successful, but their patients die. Or it could be like hole-in-one insurance: They cover the losses of doctors who bet their patients will die but turn out to be wrong.
JoAnna’s line of inquiry also opened up another thing about which I’ve been curious. For the longest time, I couldn’t decide what the difference was between an insurance company and an assurance company. Then I figured it out:
Insurance companies use the Law of Large Numbers (the small contributions of the many protect against the large losses of the few) to derive — through underwriting, the natures of particular risks, their likelihoods, and personal information about the policyholders — premiums, which are paid periodically by those policyholders. Those premium payments contribute to the claim reserves insurance companies are required to hold against the prospect of claim payments to their policyholders on the various insurance policies they’ve issued.
Assurance companies also collect premiums for their assurance services, which vary by policy type. Here are some examples:
- If you purchase a Performance Policy, one of the assurance company’s representatives will call you periodically to tell you you’re doing a heck of a job.
- If you purchase an Insecurity Policy, one of the assurance company’s representatives will call you periodically to tell you you’re a heck of a guy (or gal) and doggone it, people like you.
- If you purchase a General Liability policy, one of the assurance company’s representatives will call you periodically to tell you no matter what happened, it wasn’t your fault.
While there is some overlap (you have to pay premiums to both kinds of companies), discriminating consumers should choose wisely between insurance and assurance companies, based on their most urgent needs.
It’s Better to Feel Good …
If you happen to think, as I do, that money isn’t everything, perhaps the loss of self-esteem feels more costly than the loss of a home, a car, a business, or anything else you might choose to insure. In that case, you’ll likely find the services of an assurance company much more valuable.
How do you feel? Are you positive?