Trending Now
Commercial Legal Innovation

A Radical Idea: What if We Restructured the Insurance Industry for the Public Good?

By Reid Zeising |
December 5, 2024

A Radical Idea: What if We Restructured the Insurance Industry for the Public Good?

The following was contributed by Reid Zeising, CEO & founder of Gain.

Health insurance and third-party liability insurance are public goods, yet the insurance industry is structured on a for-profit model, which focuses on increased profits and shareholder returns, often over the needs and welfare of policyholders and claimants. Today’s largest insurers, especially third-party liability carriers, reap over $100 billion in annual profits, [1] while premiums and costs are on the rise for those depending on the policies that they issue for their financial protection. The insurance industry has a moral responsibility and a duty as a corporate citizen to prioritize its policyholders and claimants. By transitioning to a public utility model, the industry can refocus its priorities without jeopardizing liability carrier’s needs to cover operating costs and pay shareholder returns. By thinking like – and actually being – a public utility, insurers can fulfill their duties as a provider of an essential public good without imperiling their own financial health.

Transitioning to a Public Utility Model

The insurance industry predominantly operates on a for-profit model, emphasizing profit maximization[2] and shareholder returns.[3] This model, however, often neglects the welfare of policyholders and claimants.[4] It also does not reflect the reality that health insurance and third-party liability insurance are public goods. A public good is a benefit or service that should be available to all citizens and that ultimately contributes to the wellbeing of society as a whole.[5] One proven and effective model for delivering public goods is the public utility company, which is privately owned by investors, but committed to the provision of public good. A public utility company oversees essential services, ensuring their accessibility, reliability, and affordability.[6] By restructuring third-party liability carriers along these lines, we can elevate the role of insurance carriers from profit-centric entities to institutions focused on consumer welfare.[7] Similar to utilities, carriers could receive a fixed, reasonable return,[8] enabling investments in increased technology and efficiencies and sustainability while preventing the accumulation of excessive profits at the expense of policyholders.

Benefits of the Public Utility Model

Enhanced Payouts: Transforming the current model would necessitate that carriers pay out all remaining premiums to claimants, after covering operational costs, guaranteed returns and dividends. This fundamental change would translate to increased payouts for claimants, alleviating their financial burden and ensuring adequate compensation. This contrasts with the present situation, where substantial portions of premiums are often reserved for investments and increased profit margins, limiting the resources allocated to claimants. The Affordable Care Act sought to cap profits by mandating that health insurance companies could spend no more than 20 percent of revenue from premiums on administrative costs, marketing, and profits. However, insurers have skirted these rules by increasing overall costs and raising premiums, boosting revenues.[9] Therefore, further reform, along the lines proposed here, is needed.

Industry Shift to Public Good: By orienting the industry towards the welfare of policyholders and the larger community, we can establish a new standard of corporate responsibility within insurance carriers. This alteration fosters a climate where the pursuit of public good[10] becomes inherent, eclipsing the erstwhile emphasis on profit maximization. Under this paradigm, carriers become stewards of societal welfare and financial responsibility, ensuring equitable distribution of resources and safeguarding policyholder interests.[11]

Policyholder Centric: In this reimagined model, policyholders would be the primary beneficiaries, receiving enhanced protections and services. This framework mandates a focus on policyholder needs and aspirations, catalyzing the development of consumer-centric policies and practices. Additionally, the compulsory dividend payouts would ensure that policyholders receive tangible, financial benefits, contributing to economic stability and welfare.

A More Equitable Economy: The proposed transition has profound economic implications, marking a departure from purely capitalistic orientations to a more balanced, equitable economic structure. The substantial increase in payouts would stimulate consumer spending and economic activity, while the emphasis on public good would promote social cohesion and mutual responsibility. Moreover, this shift would mitigate the socioeconomic disparities[12] emanating from the current profit-driven model, fostering a more inclusive and equitable economic environment.

Redefining the Insurance Industry

The transformation of the insurance industry — particularly third-party liability carriers – into a public utility model is a radical yet necessary step towards creating an equitable and consumer-oriented industry. By guaranteeing returns and mandating the allocation of remaining premiums to claimants, we can ensure the industry serves the public good and prioritizes policyholder welfare. This transition is not merely a structural adjustment; it symbolizes a philosophical shift, redefining the purpose and responsibilities of insurance carriers in a way that recognizes that third-party liability insurance carriers are essential public goods. This revolutionary approach promises increased payouts, enhanced policyholder benefits, and a collective pursuit of societal well-being. The pivot from a profit-centric paradigm to a model centered on public welfare, where the interests of consumers are placed above unchecked profit accrual. In the long term, this alteration can be a catalyst for more claims being paid and funds being utilized for the purposes they were intended.  Insurance is in place to reimburse those who have suffered through no fault of their own, and a utility model can assure that more monies are paid to consumers and less goes into the coffers of companies beyond what is needed to service these portfolios.

[1] “Visualizing the 50 Most Profitable Insurance Companies in the U.S.,” HowMuch.net, https://howmuch.net/articles/top-50-most-profitable-us-insurance-companies-2020. Data is based on Fortune 500 listings.

[2] Elisabeth Rosenthal, “Insurance policy: How an industry shifted from protecting patients to seeking profit,” Stanford Medicine Magazine, May 19, 2017, https://stanmed.stanford.edu/how-health-insurance-changed-from-protecting-patients-to-seeking-profit/.

[3] Nathalia Bellizia, Davide Corradi, and Jürgen Bohrmann, “Profitable Growth Is King: The 2022 Insurance Value Creators Report,” Boston Consulting Group, September 2, 2022, https://www.bcg.com/publications/2022/insurance-total-stakeholder-return-value-creation-report/.

[4] Rosenthal, “Insurance policy.”

[5] National Consumer Law Center, Access to Utility Service, 6th ed. 2018, 1.1.5, www.nclc.org/library; Jason Fernando, “What Are Public Goods? Definition, How They Work, and Example,” Investopedia, March 20, 2022, https://www.investopedia.com/terms/p/public-good.asp.

[6] David E. McNabb, “Chapter 1: Public utilities: essential services, critical infrastructure,” in Social and Political Science 2016, October 28, 2016, 3-18, Elgar Online, https://www.elgaronline.com/display/9781785365522/chapter01.xhtml.

[7] Jonathan D. Washko, “It’s Time to Resurrect the Public Utility Model Concept–But This Time for Healthcare,” Journal of Emergency Medical Services, October 18, 2017, https://www.jems.com/news/it-s-time-to-resurrect-the-public-utility-model-concept-but-also-for-healthcare-this-time/.

[8] McNabb, “Chapter 1: Public utilities: essential services, critical infrastructure.”

[9] Marshall Allen, “Why Your Health Insurer Doesn’t Care About Your Big Bills,” NPR, May 25, 2018, https://www.npr.org/sections/health-shots/2018/05/25/613685732/why-your-health-insurer-doesnt-care-about-your-big-bills.

[10] Samuel S. Flint, “Public Goods, Public Utilities, and the Public’s Health,” Health & Social Work, Volume 36, Issue 1, February 2011, 75–77, https://academic.oup.com/hsw/article-abstract/36/1/75/659133?redirectedFrom=PDF.

[11] Carter Dredge and Stefan Scholtes, “The Health Care Utility Model: A Novel Approach to Doing Business,” NEJM Catalyst, July 8, 2021, https://catalyst.nejm.org/doi/full/10.1056/CAT.21.0189.

[12] Samuel L. Dickman, David U. Himmelstein, and Steffie Woolhandler, “Inequality and the health-care system in the USA,” America: Equity and Equality in Health 1, The Lancet, April 8, 2017, Volume 389, 1431-1441, https://www.thelancet.com/pb/assets/raw/Lancet/pdfs/US-equity-and-equality-in-health-1491475717627.pdf.

Secure Your Funding Below
Secure Your Funding Sidebar

About the author

Reid Zeising

Reid Zeising

Commercial

View All
Commercial Regulatory Issues

Bloomberg Law Cites Legal Funding Journal Podcast in Commentary on Funder Transparency

By John Freund |

A recent episode of the Legal Funding Journal podcast was quoted in a Bloomberg Law article on funder control of cases. In the episode, Stuart Hills and Guy Nielson, Co-Founders of RiverFleet, discussed the thorny topic this way: “What do funders care about? They certainly do care about settlements and that should be recognized. They do care about who is the legal counsel and that should be recognized. They care about the way the case is being run. They care about discontinuing the legal action and they care about wider matters affecting the funder.”

The provocative new commentary from Bloomberg Law reignites the longstanding debate over transparency in third-party litigation funding (TPLF), asserting that many funders exercise considerable control over litigation outcomes—despite public disavowals to the contrary.

In the article, Alex Dahl of Lawyers for Civil Justice argues that recent contract analyses expose mechanisms by which funders can shape or even override key litigation decisions, including settlement approval, counsel selection, and pursuit of injunctive relief. The piece singles out Burford Capital, the sector’s largest player, highlighting its 2022 bid to block a client’s settlement in the high-profile Sysco antitrust matter, even as it publicly claimed to be a passive investor. Such contradictions, Dahl contends, underscore a pressing need for mandatory disclosure of litigation funding arrangements under the Federal Rules of Civil Procedure.

The analysis points to contracts that allegedly allow funders to halt cash flow mid-litigation, demand access to all documents—including sensitive or protected materials—and require plaintiffs to pay sanctions regardless of who caused the misconduct. Courts and opposing parties are typically blind to these provisions, as the agreements are often shielded from disclosure.

While funders like Burford maintain that control provisions are invoked only in “extraordinary circumstances,” Dahl’s article ends with a call for judicial mandates requiring transparency, likening funder involvement to insurers, who must disclose coverage under current civil rules.

For legal funders, the takeaway is clear: scrutiny is intensifying. As the industry matures and high-profile disputes mount, the push for standardized disclosure rules may accelerate. The central question ahead—how to balance transparency with funder confidentiality—remains a defining challenge for the sector.

Case Developments Commercial

Siltstone vs. Walia Dispute Moves to Arbitration

By John Freund |

Siltstone Capital and its former general counsel, Manmeet (“Mani”) Walia, have agreed to resolve their dispute via arbitration rather than through the Texas state court system—a move that transforms a high‑stakes conflict over trade secrets, opportunity diversion, and fund flow into a more opaque, confidential proceeding.

An article in Law360 notes that Siltstone had accused Walia of misusing proprietary information, diverting deal opportunities to his new venture, and broadly leveraging confidential data to compete unfairly. Walia, in turn, has denied wrongdoing and contended that Siltstone had consented—or even encouraged—his departure and new venture, pointing to a release executed upon his exit and a waiver of non‑compete obligations.

The agreement to arbitrate was reported on October 7, 2025. From a governance lens, this shift signals a preference for dispute resolution that may better preserve business continuity during fundraising cycles, especially in sectors like litigation finance where timing, investor confidence, and deal pipelines are critical.

However, arbitration also concentrates pressure into narrower scopes: document production, expert analyses (especially of trade secret scope, lost opportunity causation, and valuation), and the arbitrators’ evaluation. One point to watch is whether interim relief—protecting data, limiting competitive conduct, or preserving the status quo—will emerge in the arbitration or via court‑ordered relief prior to final proceedings.

Case Developments Commercial

ASB Agrees to NZ$135.6M Settlement in Banking Class Action

By John Freund |

ASB has confirmed it will pay NZ$135,625,000 to resolve the Banking Class Action focused on alleged disclosure breaches under the Credit Contracts and Consumer Finance Act (CCCFA), subject to approval by the High Court. The settlement was announced October 7, 2025, but ASB did not admit liability as part of the deal.

1News reports that the class action—covering both ASB and ANZ customers—alleges that the banks failed to provide proper disclosure to borrowers during loan variations. As a result, during periods of non‑compliance, customers claim the banks were not entitled to collect interest and fees (under CCCFA sections 22, 99, and 48).

The litigation has been jointly funded by CASL (Australia) and LPF Group (New Zealand). The parallel claim against ANZ remains active and is not part of ASB’s settlement.

Prior to this announcement, plaintiffs had publicly floated a more ambitious settlement in the NZ$300m+ range, which both ASB and ANZ had rejected—labeling it a “stunt” or political gambit tied to ongoing legislative changes to CCCFA.

Legal and regulatory observers see this deal as a strategic move by ASB: it caps its exposure and limits litigation risk without conceding wrongdoing, while leaving open the possibility of continued proceedings against ANZ. The arrangement still requires High Court consent before going ahead.