Democracy as insurance

Explaining the existence and stability of democracies pose difficulties for the Public Choice-paradigm. The article argues that these difficulties may be resolved by focusing on the insurance-aspect of democratic decision-making procedures. Democratic regimes may be better able than autocratic regimes to provide the inhabitants with insurance against the risk of being subjected to arbitrary suppression from the ruling elite. This propensity of democratic regimes may explain the origin, as well as stability, of such regimes.     

论保险公司应收保费风险的成因与对策

近年来,随着金融危机的蔓延以及我国保险业的快速发展,由于保险公司自身、保险中介机构、客户等原因造成的保险公司应收保费急剧增加,直接影响着保险公司的现金流及财务稳定性,其潜在危害很大,已引起保险监管机构和各保险公司的高度关注。认真分析应收保费风险的成因及危害,采取有效措施,防范风险,具有重要的现实意义。     

The savings and loan insurance mess

He is author of The Gathering Crisis in Federal Deposit Insurance;and The S&L Insurance Mess: How Did It Happen?     

Catastrophe risk,insurance and terrorism

This article empirically investigates how the terrorist activity of September 11, 2001, was addressed by the insurance industry and government in the United States. It shows that the insurance system worked reasonably well in compensating losses suffered, albeit with various tribulations. It also demonstrates that the insurance industry, along with government as the ultimate risk manager, imaginatively reconfigured markets to continue terrorism insurance coverage in many contexts. The findings challenge many of Ulrich Beck’s contentions about catastrophe risks and insurability. At the same time, they indicate the fragility of the insurance system. Insurers’ perceptions and decisions about uncertainty – with potential for windfall profits as well as catastrophic losses – create crises in insurance availability and promote new forms of inequality and exclusion. Hence, while the insurance industry is a central bulwark against uncertainty, insurers can also play a key role in fostering it.     

Property rights and unemployment insurance reserves

Unemployment insurance (UI) laws have recently come under considerable criticism for fostering employment disincentives. Imperfections in the experience rating tax schedule has been the primary causal factor behind most of these allegations. In particular, the insurance subsidies created by the tax schedule have been blamed for distorted labor markets and for increased layoffs.This article proposes that a property rights system be established for UI reserves which would enable a firm with an unemployment insurance reserve surplus to lend voluntarily to a firm in need of reserves. Such a system would allocate reserves more efficiently and eliminate some of the disincentives effects of the current unemployment insurance scheme. A property rights system would be a second best solution to perfecting the present unemployment insurance system and making it actuarially sound. However, assigning rights to UI reserves can be implemented without challenging the special interests of the politically dominant industries that have been responsible for maintaining the imperfections in the UI system for 50 years.     

Vote splitting as insurance against uncertainty

The present article offers a rational choice explanation for political ticket splitting. It considers a game-theoretic model of voting and bargaining within Congress and between Congress and the president. When parties are ideologically oriented and voters' utilities are state dependent, the model shows that if there is uncertainty about the true state of the world, ticket splitting emerges as a tool risk-averse voters use in order to insure themselves against extreme policies in bad states of nature.     

Actuarial status of the HI (hospital insurance) and SMI (supplementary medical insurance) Trust Funds

This article is adapted from the 1987 Annual Reports of the Medicare Board of Trustees. It presents a summary of the current financial and actuarial status of the Hospital Insurance (HI) and Supplementary Medical Insurance (SMI) Trust Funds. The Board found that the present financing schedule for the HI program is sufficient to ensure the payment of benefits over the next 12-14 years if the intermediate (II-A and II-B) assumptions underlying the estimates are realized. Although steps have been undertaken to reduce the rate of growth in payments to hospitals, the Board urges Congress to take remedial measures to bring future HI program costs and financing into balance. The Board found the SMI program to be actuarially sound but recommends that Congress take action to curtail the rapid growth in that part of Medicare.     

A perception of motorcycle insurance in Nigeria

The purpose of this paper is to find out people＇s perception of motorcycle insurance while comparing the perceptions of insurance companies＇ staff with that of their customers （the motorcyclists）, and also find out the major causes of motorcycle accidents in Nigeria. A total of 140 respondents were sampled using the questionnaire. The kolmogorov smirnov test was used to test the hypothesis. Findings show a general negative perception of insurance services by the motorcyclist and a large disparity in the responses of the motorcyclists and the insurance companies＇ staff. The major causes of motorcycle accidents are also found to be over speeding, carelessness and poor driving skills.     

Actuarial status of the OASI (old age survivors insurance) and DI (disability insurance) Trust Funds

This article summarizes the current financial condition and actuarial status of the Old-Age, Survivors, and Disability Insurance (OASDI) program, as shown in the 1987 Annual Report of the Board of Trustees. The Trustees note that the assets of the OASI and DI Trust Funds, on a combined basis, will be sufficient to permit the timely payment of OASDI benefits for many years into the future, on the basis of all four sets of assumptions shown in the report. For the next 75 years, the estimates show that the OASDI program, overall, is in close actuarial balance, based on the two intermediate sets of assumptions. The DI program by itself, however, is not in close actuarial balance for the next 75 years. The actuarial deficit for the DI program could be remedied by a small reallocation of the contribution rate from OASI to DI, in such a way that the OASI program would remain in close actuarial balance and OASDI benefits would not be affected. Although the Trustees are not recommending such a reallocation, they note that the financial condition of the DI program will need to be carefully monitored.     

Kidnap insurance and its impact on kidnapping outcomes

In the developing world, kidnapping is relatively common, and a market for kidnap insurance has arisen in response. We provide a model that allows us to analyze how kidnap insurance affects the interaction between the kidnapper and the victim’s family when both are self-interested and have complete knowledge. We find that a market for kidnap insurance can be supported because it benefits a risk-averse family, as long as the introduction of insurance does not increase the risk of kidnapping too much. Families should fully insure if purchasing insurance does not increase the probability of kidnapping, and partially insure otherwise. Kidnapping insurance allows families to redeem hostages from kidnappers with a greater willingness to kill, which may reduce the number of kidnapping fatalities as long as the insurance does not increase the risk of kidnapping too much.     

The choice of insurance in the labor market

Employment protection and unemployment benefits are considered the most prominent insurance devices for workers to protect themselves against the risk of unemployment. It occurs that societies either choose a high level of employment protection relative to unemployment benefits or vice versa. This paper explains where countries locate on this trade-off. It is argued that higher coverage of voters out-of-the labor force with intra household transfers yields a politico-economic equilibrium with relatively high employment protection and relatively low unemployment benefits. Cross country data and survey data on voters’ preferences are presented that corroborate the outcomes of the model.     

Health maintenance insurance: Toward an optimal HMO

The financial incentive structure of today's health maintenance organizations addresses certain problems attributed to fee-for-service medical care, but at a theoretical level it does not induce optimal provider behavior. Health maintenance insurance—a combined package of medical, morbidity/disability, and life insurance—encourages providers to compete for the health dollar, and not simply the medical care dollar, thereby remedying deficiencies in prepayment and promoting true health maintenance. The principle underlying health maintenance insurance emphasizes the need to search for effective means of preventing disability, morbidity, and premature death.This is a revised version of a paper presented at the 105th Annual Meeting of the American Public Health Association, Washington, D.C., October 30–November 3, 1977.     

The government behind insurance governance: Lessons for ransomware

The insurance as governance literature focuses on the ability of private enterprises to collectively regulate, pool, and distribute risks. This paper analyzes how governments support insurance markets to maintain insurability and limit risks to society. We propose a new conceptual framework grouping government interventions into three dimensions: regulation of risky activity, public investment in risk reduction, and co-insurance. We apply this framework to six case studies, describing insurance markets' reliance on public support in more analytically precise terms. We analyze how mature insurance markets overcame insurability challenges akin to those currently presented by extortive cybercrime. Private governance struggled when markets grew too big for informal coordination or when (tail) risks escalated. Government interventions vary widely. Some governments prioritize supporting economic activity while others concentrate on containing risks. Governments also choose between risk reduction and ex post socialization of losses. We apply these insights to the market for ransomware insurance, discussing the merits and potential hazards of current proposals for government intervention.