Here are some key quotes from my latest podcast with Jason Duffy, founder of Fieldstone Insurance Group, discussing the ins and outs of employee health insurance:

“There are three real buckets of insurance that a hedge fund, alternative asset manager, family office will need. The first bucket is basic insurance – healthcare PEOs, employee benefits, you name it, mandatory requirements that each state has or town or city has for operating in business.”

“We knew we needed to be independent. We also were getting pushed by our clients. I think that happens too. We don’t always make the business decision, our clients tell us, ‘hey, you know, we can’t do business with you if you keep going on this posture.’ And that’s kind of what happened to us.”

“And so we have this 8% compound price increase over the last 20 years. That was like a runaway train. Not really that big deal from 2000 to call it 2008 because everyone was making money and the premium numbers were relatively small in the hedge fund industry. It was a rounding error. I would hear that even if it went up 8%.”

“The PEOs came in with this fascinating concept 17 years ago, originally focused heavily around the burgeoning tech industry in New York.”

“[The PEOs] said, ‘Well, we can come up with this legal construct that kind of looks like an employee-employer relationship, and then we can take everybody together in this fascinatingly beautiful, one-buying block, and go to Aetna to leverage better deals.”

“Every one of these PEOs is both good and bad.”

“And to be fair, the qualitative differences are all kind of disappearing, they’re all just kind of smashing together low customer service, medical plans where they aren’t as rich as they used to be, and price points that aren’t that different unless you find an anomaly within one of the PEOs.”

“Switching is generally the least attractive option, and my grandmother used to say the grass is not greener on the other side, and that is a pretty true statement with PEOs.”