Here the employer is seeking to remove all or part of its determinable contingent risk arising from its obligations under the health benefit plan it established for its employees. Employers know that they stay ultimately obligated under the plan to their employees. However, the employer has an expectation that when it prepays a fixed amount to someone to take over a variable obligation belonging to them, that the person or entity will be there when the time comes to perform. Insurance laws are designed to protect all consumers. Employers are consumers.
Employers purchase all types of insurance to help covers risks that they are primarily liable for.
A general scheme to distribute the loss among the larger group of persons bearing similar risks. The scheme to distribute losses among a larger group of persons arises from a theory that having to provide more services to one employee will be balanced out by under-utilization of many other employees. It is highly unlikely that a provider will join one of these groups and engage in these activities solely with one employer. Even where they have done so, this analysis would hold true, namely, that the activities would be the business of insurance. The payment of a premium for the assumption of risk.