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January 29, 2013

Don't have health insurance? Start your own insurance company

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NEW YORK —

Horowitz began by forming the nonprofit Freelancers Union in 2003. It shared information, nurtured freelancer networking, and began the process of building solidarity. But she quickly saw that, for independent contractors who don't get coverage through their employers, obtaining affordable health insurance was the truly pressing issue.

Her first instinct was to deal with existing insurance companies to get her group a better rate. But at a certain point she decided the plans that were already out there didn't fit freelancers' needs and didn't account for their unique circumstances. So why not invent an insurance company of her own? "It was an audacious idea," chuckles Nancy Barrand of the Robert Woods Johnson foundation, which helped provide funding to get Horowitz's project off the ground. "People don't just start insurance companies in this day and age. She had to raise $10 million in reserves to qualify for an insurance license in New York. But she'd been negotiating with insurance companies, she knew the market, she'd seen the data on costs and benefits, and she realized, 'I can make it work better. I can be more efficient. I can do it myself.' "

The Freelancers Insurance Company launched in New York in 2008. It is wholly owned by the Freelancers Union and has no individual shareholders. In its first year, FIC lost money and had to raise rates. But by its second year, it was profitable. It has been profitable ever since. At a time when other insurance providers are seeking and winning double-digit rate increases, FIC has managed to freeze its premiums for the coming year. (Disclosure: I signed on for FIC health coverage last year. So far, so good.)

Sitting at her desk in a low-profile office in Brooklyn's DUMBO neighborhood, Horowitz described to me a three-step process for turning a notion into a reality. It boils down to: 1) Find the North Star that guides your mission. 2) Practice poking holes in your business model until you're certain it will actually work. 3) Find people who understand the concept of loyalty.

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