> I was more saying the point of insurance in general to those buying the insurance is to protect against outliers.
Yes, and the basic principle of an insurance pool is to use the pool's size to absorb the impact of an outlier event. The larger the pool, the better it is able to absorb such an event. This means a small company can be a risky place to set up a self-insurance scheme on which the employees depend.
> since AOL 'self insured' there wasn't an insurance company at the heart. AOL just decided to cut corners and 'put away money for a rainy day', and was shortsighted on how much to put away, to put it simply
Yes, and that's a surprisingly common outcome -- it's the downside of self-insurance plans -- often a company or an individual doesn't actually have the resources to deal with an outlier, or a sudden surge in claims is synchronized with a business reversal.
Yes, and the basic principle of an insurance pool is to use the pool's size to absorb the impact of an outlier event. The larger the pool, the better it is able to absorb such an event. This means a small company can be a risky place to set up a self-insurance scheme on which the employees depend.
> since AOL 'self insured' there wasn't an insurance company at the heart. AOL just decided to cut corners and 'put away money for a rainy day', and was shortsighted on how much to put away, to put it simply
Yes, and that's a surprisingly common outcome -- it's the downside of self-insurance plans -- often a company or an individual doesn't actually have the resources to deal with an outlier, or a sudden surge in claims is synchronized with a business reversal.