Health Care Bill Misses a Key Point

Nov. 19, 2009 - PRLog -- The House has passed it and the Senate will now grapple with their own version.  It's the Congress' latest stab at 'health care reform'.  But, at no time has anyone asked a key question: How do health insurers (whether public or private) invest the premiums?

"Poor investment results can actually keep health premiums high," according to Alton R Cogert, CFA, CPA, CAIA, author of "Uncertain Times: A Chief Investment Officer's Journey".

"Insurers are generally focused on achieving a target return for their shareholders.  Even if they do a terrific job of underwriting, they may have problems if their investment process is inadequate," Cogert notes.  "And every insurer approaches their investment process a bit differently because of varying risk appetites imbedded in the Board and senior management."

"Further complicating matters," he notes, "is that ugly word called leverage.  The more financial leverage an insurer has, the greater the probability that something terrible can go wrong, endangering the benefits provided by the insurer."

Cogert notes that the "health care reform bills" before Congress all attempt to 'solve' health care, but don't consider all the aspects, especially investments.  

"We just got hit with a huge financial and economic crisis due to bad risk management decisions about investments.  Yet, this topic has never surfaced in hearings about the bills," he points out.  "You've gotta wonder if the politicos fully understand with what they are dealing."


"Uncertain Times" is published by CB Woodbridge Publishing and is available on Amazon.com (http://www.tinyurl.com/utimes).

Alton R. Cogert, CFA, CPA, CAIA, is President and Chief Executive Officer of Strategic Asset Alliance (www.saai.com), an investment consulting firm that exclusively serves insurance companies.  Founded in 1994, the firm focuses on improving the investment process of insurers, since solid investment results flow from a successful process.  Mr. Cogert holds a BS from the Wharton School of the University of Pennsylvania and an MBA from the Marshall School of the University of Southern California

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Strategic Asset Alliance is an investment consulting firm exclusively serving insurance companies. Its principals are all former Chief Investment Officers of insurers focused on improving the investment process, resulting in improved financial results.