Why not co-op insurance?

Short post, a lot of people complain about high costs of insurance and it being forced on people. So why not co-op based insurance? Credit unions demonstrate a market for community based financial based institutions.

The biggest blocker is current legislation (in Ireland) requires an insurance company to have €1 million bonded in the country for the purpose of paying out on funds they may not have. As you know from my bio I'm strongly in favour of market deregulation and would happily see this go, consumers should demand companies prove ability to deliver the service. Without that my following loose idea should work.

Co-op insurance:
The core idea here will be community based. People who join the co-op do it for there own gain and to benefit their community, similar to the how and why credit unions operate. Essentially over a given number of people you can assume averages of what diseases will be prevalent so from the outset you can easily assume an average annual policy cost, this will give a baseline policy cost. Genetic testing would be essential here, this will cause an increase to premiums for the individual but being a community minded co-op most the cost should be spread across the consumer base, similar can be applied with pre-existing conditions. If the initial baselining was done accurately the mark up wouldn't be to great. Why the mark up for those more likely to have illness? It'll keep the costs down for the rest of the group and make the scheme more attractive to people less likely to require the insurance fund, the more people you have not needing the fund the cheaper it is for those who will be using it regularly.

Competitive medical market:
This hypothetical insurance co-op would benefit by encouraging people to find doctors. Give the customer a ball park cost for the procedure they need and keep a directory of doctors but not limit the customer to this doctors. Allow the customer to contact and negotiate the best price with simple haggling, call a few doctors find who has the best rate, use that to drive down costs with other doctors, this could be done by the co-op for a low enough administrative fee but complacency or back handers will happen.

So why not co-op insurance?