Talk:Insurance
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[edit] Old topics
I updated the first section on prinicples of insurance. I'm not too sure about what I said about the NAIC and Guaranty Funds (factually I'm sure but in terms of placing, relevenece I'm not). My limited time limits my contribution but I will ocme back and visit to work on it some more. NOte to anyone who would like to tackle a factual information section, the insurance information institute has lots of figures and statistics, etc and could be a useful place to look. [1]. I agree that legal principle like moral hazard and adverse selection need desperatley to be tackled.
This article seriously needs input from economists and marketing people. I'll do what I can when I have the time, but it reads like a current affairs piece and doesn't contain any discussion of fundamental features of insurance markets like information assymetry, moral hazard and adverse selection and the associated marketing techniques to avoid them.
Private health insurance is a major matter only for travellers and citizens of the US. It does not deserve this much space in this article. Move it to a more specific article like US health insurance. Most people reading this are not Americans, and don't care. What you say can be said in about one paragraph on that issue.
- Private health insurance is available even in (nearly all) countries with public health insurance, and is worth discussing. I do think there could be a whole article on the ethical debate. Tempshill 20:21, 3 Nov 2003 (UTC)
There is plenty to talk about insurance in general, e.g . reinsurance markets (see commodity markets for an example of how that could be structured), morbidity calculations, actuarial professions, use of insurance for portfolio management (very common as a tax planning instrument), etc., etc., etc., etc.
This page needs work. There's a lot more to be said about insurance. Also, the "abuses" section needs to be rewritten for NPOV. -- Cjmnyc 07:48, 31 Jul 2003 (UTC)
Insurance is a complex and remarkably interesting subject. Someone smarter than I needs to work on this one.
I have been doing some work on [[List of civic, fraternal, service, and professional organizations American Fraternal Groups]] and note the large number of modern insurance companies who evolved from such groups.
[edit] what about insurance brokers?
Insurance broker represents buyer rather than a insurance copany and should find a best policy for buyer in coparison shopping.A Broker of Record for you should assist you with adding new employees or terminating employees from your group plan. They should also help you claim problems, Answering employees' questions about how their plan works. Remember- Your agent is getting a commission every month from the insurance company to service your account-Make sure they are giving you the service you deserve?
[edit] Lack of Knowledge of Policyholders
I removed the portion of this that mentioned poorer policyholders not understaing the fees in insurance documents. I suppose I felt uncomfortable connecting lack of financial resources with lack of intellectual ability.
I feel this section needs more work, as does the rest of the article - I plan on adding to the introductory section, perhaps including concepts such as insurable interest, insurability, underwriting etc. Perhaps contrasting insurance with gambling (as is done on the gambling page). --Socs 09:30, 16 Jun 2004 (UTC) I can write about them
[edit] Removed paragraph
Removed this paragraph: it is rambling, non-insurance-specific, and has no important point to make. [[User:Smyth|– Smyth]] 00:06, 30 Oct 2004 (UTC)
- Large organizations have a much harder time managing money than individuals. While large organizations have more clout and are better and negotiating contracts, they lack the ability to micromanage their money. This has to do with scale. To a multi-billion dollar company a million dollars is an accounting blip, but to most people it is enough money to retire. As a result the organization sets the prices for policies and services at some level and acts as a monopoly. Without freemarket competition their is an incentive to increase prices.
The other paragraph added by the same anon is nearly as bad, very POV and very little information. I'll remove it for now and we can refactor it and put it back in. - Taxman 18:06, Nov 8, 2004 (UTC)
- 'Law of Diminishing Returns'
- Insurance is based on the idea of managing risk, but what happens when everyone cashes in their policy. The net result is that insurance becomes a tax. Also insurers can deny policies based of preexisiting conditions and can limit the coverage of insurance. When combined with high premiums, what is the point of having insurance? It would be better to take the money spent on insurance and invest it. That way the policy holder will have control over how the money is spent. The only problem is accumulating enough money to make the system self sustainable. This is a chicken egg problem.this all is wonderfull...........ch
[edit] Lack of Marine Insurance & Air Cargo Insurance
Lack of Marine Insurance and Air Cargo Insurance. Need any expert from Insurance Business to input.
[edit] Added
Added statistics and an external link. Johnwhunt 00:06, 22 Mar 2005 (UTC)
[edit] Rework agenda
- Taxman suggested developing salvage plans for this article. While many groan at the notion of committees, they do share one drawback in common with democracy: being the worst possible choice, except the rest. In any case, anyone is welcome to add to, or amend, the 'agenda' items below. The agenda will simply draw from the above suggestions for now, but perhaps will be prioritized later; meanwhile, another go at reworking the article... Ombudsman 03:25, 16 Jun 2005 (UTC)
| objective summary | date proposed | progress to date | completion date? |
| lightspeedy tasks: prompt attention needed | |||
|---|---|---|---|
| ~ | ~ | ~ | ~ |
| ~ | ~ | ~ | ~ |
| main proposal sounding board | |||
| separate Insurance ethics article needed | 3 Nov 2003 | ~ | ~ |
| separate US health insurance article? | 1 Oct 2004 | ~ | ~ |
| develop & expand Policy article | 16 Jun 2005 | ~ | ~ |
| need expert: Marine insurance,
Air cargo insurance |
11 Jan 2005 | ~ | ~ |
| ins. market fundamentals: Moral hazards,
Information assymetry, Adverse selection, techniques to avoid such risks |
1 Oct 2004 | ~ | ~ |
| content addressing Insurable interest,
Insurability, Underwriting, etc. |
16 Jun 2004 | ~ | ~ |
| what about Insurance brokers? | 2 Jun 2004 | added brief mention of Marsh 6/15/05 | ~ |
| US fraternal insurers, history | 12 Dec 2003 | ~ | ~ |
| Reinsurance market, & its structure | ~ | ~ | ~ |
| Morbidity calculations & | 23 Jan 2003 | ~ | ~ |
| insurer (insured?) Portfolio management | 23 Jan 2003 | ~ | ~ |
| address: complexities of contracts,
fees; insured's misunderstanding |
16 Jun 2004 | ~ | ~ |
| Risk spreading, Risk pools | ~ | ~ | ~ |
| insurer portfolio mis-management and/or
separate Portfolio mis-management article |
~ | ~ | ~ |
| effects of September 11, 2001 attack; | 16 Jun 2005 | ~ | ~ |
| What about Insurance Agents (Captive and Independent)? | 05 Jun 2007 | ~ | ~ |
| ~ | ~ | ~ | ~ |
| ~ | ~ | ~ | ~ |
| touchy feelings: NPOV or Pavlov needed? | |||
| input from economists, marketers | 1 Oct 2004 | ~ | ~ |
| private health insurance available
in countries with socialized medicine |
3 Nov 2003 | ~ | ~ |
| ~ | ~ | ~ | ~ |
| ~ | ~ | ~ | ~ |
| fuzzy-logic: content gutwrenchers | |||
| Start Insurance Wikiproject?
pinned (please do not remove) |
16 Jun 2005 | ~ | ~ |
| what should top level sections be?
(pinned - please do not remove) |
16 Jun 2005 | ~ | ~ |
| which topics need separate sections?
(pinned) |
16 Jun 2005 | ~ | ~ |
| insurers manage risk, but profit (unfairly?)
when policies cashed in early |
~ | ~ | ~ |
| private health insurance less common
outside US; deserves less space? |
23 Jan 2003 | ~ | ~ |
| ~ | ~ | ~ | ~ |
| ~ | ~ | ~ | ~ |
[edit] agenda discussion
Ok, most of that looks pretty good. I was looking for more of a simple text outline, but this works too. I didn't want to comment in the table, but what do you mean by "fuzzy-logic gutwrenchers" and "touchy feelings:". I don't know if you're going to get much of a committee, you might be it. Also I think we should flesh out the material in the article sections, and make fixing up a lead section to the last thing. First, maybe we should decide what topics need their own sections, what are the top level sections, etc. - Taxman Talk 14:43, Jun 16, 2005 (UTC)
- Unlike insurance contracts, agenda section titles need brevity, without the complexities that disengage them from a mere mortal's sensory realities. The blue and green agenda sections address absolute, straightforward content issues that can be handled in a relatively objective manner; sky is blue, green light kinda stuff. Encyclopedic content, by definition, is extruded through deductive, algorithmic superficial processes, perhaps filtered in the upper agenda sections; moderation of subsurface POV issues and political compass matters can be addressed in the lower sections. The laws of organizational entropy ensure the influence of absolutist objectivity may well consolidate issues in the upper section, finding enhancement through the ministrations of small tent, blue sky expert worshipper minions (see Post Autistic Economics). The orange and soft rose sections deal with relative, absolutely subjective matters; 'shortest path isn't a straight line', 'Danger, Will Robinson!', 'rose colored glasses' sorta stuff. Discussion of relatively subjective issues will find sanctuary in the wilderness of this talk page, perhaps protected in the lower sections, where non-Aristotelian laws, obeyed by Church of the Holy Donut congregants and their ilk, govern survival of the fittest beyond the tent shielding whatever it is the prevailing paradigm happens to be. The committee idea may seem over the top for the moment, but this aspect of the agenda is intentionally open-ended, as a Wikipedia:WikiProject Insurance is anticipated; the Wiki will be around long term, yes? Ombudsman 19:17, 16 Jun 2005 (UTC)
[edit] Comment on the Gambling Analogy
The dictionary definition of a bet is to risk a sum of money against someone else’s on the basis of the outcome of an unpredictable event. I can see why one might want to compare this to insurance but the resemblance is specious. The funademental difference is that (i) prior to me making a bet there is no risk, whereas with insurance the risk that my house burns down or my car is stolen already exists (even if I do not take out insurance), and (ii) by taking out insurance I will not profit if I experience an insured event, I will simply be indemnified by the insurance company for the loss I suffer, however gambling is about profiteering. If the section on gambling is to remain I think it should highlight these differences.
I do not see the relationship with moral hazard and think it requires further explanation.
The reason the Amish avoid insurance is not (simply) because it is like gambling (which it isn’t) but because they have no need for it and it would imply a lack of trust in God. I do not think their beliefs should be misstated.
You reasoning that most societies could not afford a similar system of mutual support for individuals when disaster strikes is is also mislaeading – this is exactly the logic of insurance. If your house burns down, instead of me coming around to help you rebuild your house as I would if we were Amish, our insurance company takes a portion of my insurance premium and a portion of the premiums from other policyholders and gives it to you in order that you may pay a specialist to rebuild your house. A quite elegant solution and one fitting for a modern society??
Hm, article should at least mention religions and societies don't always accept insurance.82.93.133.130 17:41, 9 June 2006 (UTC)
hi. I rewrote the entire section. I put the "closed community" aversion to insurance in another section. [unsigned]
Insurance is the ability to offer coverage to be responsible for others mistakes. We give coverage when a 16 year old driver rams a telephone pole. We offer coverage when a 95 year old woman drives into a church. We come out like bandits when you drive safely for 50 years and promptly pay your premiums. Thats the science of insurance. (Jillianandalanja 21:28, 2 May 2007 (UTC))
[edit] Government Insurance
The article and discussions thus far seem to be about commercially offered insurance. Some governments (national through local) have activities either titled as, or described as, insurance programs. A revised article should include such government provided insurance or describe why those programs are, in fact, not insurance.
[edit] Discriminatory policy-building
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- The article currently has a paragraph within the "redlining" section that goes thus;
A refutation to this is that the job of an insurance underwriter is to properly categorize a given risk as to the likelihood that the loss will occur. Any factor that causes a greater likelihood of loss should in theory, be charged a higher rate. This is a basic principle of insurance and must be followed for insurance companies or groups to operate properly, even for non-profit organizations. Thus, discrimination of potential insureds by legitimate factors is central to insurance. Therefore the only thing that can be considered legitimately "unfair" are practices that discriminate against a given group without actual factors that show that the group is a higher risk. So, eliminating real factors discriminates against other insureds by forcing them to bear part of the cost of the disallowed perceived factors.
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- I must say that I feel whoever wrote this fails to understand why some people consider some insurance policies discriminatory. For a situation where every member of the group is at a higher risk than people not in the group, the policy is still discriminatory but is acceptably so given the higher force of mortality that applies to said group. Examples include smokers, or people living within two miles of an active volcano. However in situations where a particular group may statistically exhibit a greater chance of hazard, but where the greater probability is not caused by any intrinsic quality of these individuals but rather social and other external trends that do not necessarily apply to all members of the group, is it fair for policies to be set differently for them? For instance, the fact that black males have a lower life expectancy within the US than white males (due to a larger percentage of them living in dangerous neighbourhoods, having dangerous jobs etc), is it fair to simply increase premiums for life insurance for all black males? Would it be fair for an upper-middle class black male living in Beverly Hills to have a higher premium despite the fact that the greater hazard does not not at all apply to him?--Zoso Jade 13:48, 30 March 2006 (UTC)
It's legal. Womens' life ins. rates are, at most companies, lower than mens'.82.93.133.130 17:44, 9 June 2006 (UTC)
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- You apparently didn't follow the thread of Zoso Jade's argument. ZJ said that if a condition applies to every member of the group, then that would be acceptable discrimination. ZJ then gave an example where the characteristic applies only to certain members of the group and then only because of the presence of a new factor that had nothing intrinsically to do with that group. You, on the other hand, have taken a characteristic that, in ZJ's way of describing things, "applies to the whole group," i.e., women live longer than men and no external factor can explain it -- it's just part of being a woman, any woman, anywhere. So you haven't advanced the argument or in any way refuted Zj's argument.McTavidge 03:06, 23 January 2007 (UTC)
The current section on Redlining is fine as far as it goes, although it should be entitled something like, “The Traditional Perspective from the Insurance Industry.” Most importantly, we need to include additional discussions just as good and substantial. The term redlining comes from cases where for all intents and purposes there were lines on a map, and maybe in some cases, lines literally were drawn on a map, here’s the black community, where we don’t insure, or we insure much higher.
They’ve done studies, not of insurance, but of appraisal of market value of a house, and everything’s the same, size of house, age of house, some kind of measure of the neighborhood like per capita income, and so on and so forth, except . . . in one picture of the house there are black kids playing in the front yard and in the other picture there are white kids playing in the front yard. And we get significantly different final answers. A professional appraiser, a supposedly “neutral” process, variables going in, and yet we get very different final answers as far as the appraisal value of the house.
They’ve done news shows with a hidden camera, a young black man walking around, going into stores, inquiring about renting an apartment, and he’s treating much differently than a young white man walking around, going into stores, inquiring about renting an apartment. And this was in the 1990s when we really ought to have been past such stuff!
So when Zoso Jade writes, “may statistically exhibit a greater chance of hazard, but where the greater probability is not caused by any intrinsic quality of these individuals but rather social and other external trends,” I think he’s on the right track. That’s the kind of thing we can include at greater length in the main article. And there probably are all kinds of research and published criticism we can include as footnotes.
And the argument about lower insurance rates for woman than for men because women, on average, live longer. Is that the only thing we look at? We have two and only two rates? That would be a pretty crude and stupid way of doing it. The myriad of other factors would include a physical exam, health history, family longevity, smoking or not, obesity or not, exercise habit, gym membership, etc, etc. So, yeah, McTavidge is right, and the other individual hasn’t really made a complete argument. And at a certain point, the argument would need to become quantitative. For example, given all the above, the mere fact that a policyholder is a man or a woman, that should account for, what, 10% of it?
Let me share my own experience, not about life insurance but about auto insurance. I was born in 1963, got my license in 1979 at age sixteen. I got one ticket in 1981. I drove all the way from ’79 to ‘92 accident-free. And that year, due to hard times, I sold my car rather than fixing it (and if we want to talk about another social justice issue, we can talk about the fact that there are not enough good jobs). In 1995, things were better and I was looking to buy a car. The only thing the insurance companies were looking at was the fact that I did not have insurance over the last three years. And I mean the only thing. They were not the least bit interested in my previous good record. They were putting me into some kind of “mutual” policy. I aggressively shopped around. This seemed to be across industry. Basically, they all seemed to be a bunch of copy cats. I had to settle for a policy at $1600 a year. A year later, I was only paying $600 a year, which is what I should have been paying all along based on my good driving history. So, no, I’m not real impressed with the industry’s ability to judge various risk factors. At best, the fact that liability insurance was state-mandated (I was living in Texas) caused them to be lazy. At worse, they took advantage of the situation.
- FRO: That brought a chuckle and some memories of when I underwrote personal auto insurance back in the 70's. My company had that exact rule. The rationale (and I have to say, when I tested it the rationale had an annoying tendency to prove out) was that unlike you, most people that lacked prior insurance also seemed to lack recollection of a motor vehicle record that might arguably explain the lack of insurance. Good underwriters looked into the matter with the help of a trusted agent and made exceptions. Generally exceptions would be unlikely for 20 - 25 single men (ah, those were the days!) and more likely for 30+ year olds and women. A good, trusted agent was also a big help. Bob Herrick 21:39, 24 October 2007 (UTC)
Our entire article needs to be more controversial, “happy to accept premiums in good times, very slow . . .”, that whole thing. The fact that insurance companies sometimes delay paying a valid claim, and often it sure looks like they’re hoping that out of desperation the person will settle for a lesser amount. We need to find the best criticism on the web, summarize it in a readable voice, and footnote it. And it might also add to our article to include references to books and magazine articles that are not on the web.
Most of the writers here seem to be in the industry, which is fine, but come on, you guys know some of the most valid criticism of all. Please include it. (And by "guys" I mean the New York usage, both the men and the women in the industry.) FriendlyRiverOtter 22:50, 16 May 2007 (UTC)
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- Writing as an insurance guy (former agent, current associate with a major insurer), we tend to see a lot of vehement disapproval of various sound underwriting practices. These are nearly always "backed up" with anecdotal evidence, what-if style questions and blind indignance. So it's easy to respond to valid criticism with an air of indifference. That being said, there is a good reason that not all statistically valid criteria can be accepted - and Zoso makes it well: Correlation does not imply causation. It is important to distinguish the two. For black males, the correlation of a lower life expectancy does not imply the causation of being black.
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- The notion of "Correlation does not imply causation" being used to discredit an underwriting practice, however, must be tempered by the law of large numbers. It is not economically viable to deeply investigate every $1600/year premium to ensure that the statistics used to price the policy apply perfectly. In the example given by FriendlyRiverOtter, the reason that his premium was high for a year was not that he was in difficult financial circumstances, nor that he was part of a specific ethnic group. Rather it was because in nearly all cases people do not simply stop driving or get rid of their car. Having a three-year gap in coverage, for most people regardless of any other demographic statistic, indicates not that they ceased driving but instead that they either became uninsurable or chose to drive without insurance - two huge red flags on an underwriting evaluation.
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- CFS: As I mentioned in the response to FRO above, in my experience (five years in PL underwriting) exceptions were made where the explanation was right and there was an element of trust. I agree that many such situations netted to the same out come, but enough did not that we were encouraged to be thoughtful and not rule bound. You put your finger on the reasons why the rule exists, and in doing so, point to how to evaluate.
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- And just my own little pet peeve that's less a response to this section and more to the entire talk page: Insurance companies are in the business to make money, not screw people with some kind of giant underhanded scheme. They are the most highly regulated industry in the USA (us perspective only warning) and they are also in one of the most fiercely competitive fields around. Any company that discriminates on non-valid factors stands to lose money, both on competition and on government crackdown. It's not a scam, folks. CredoFromStart talk 21:28, 17 August 2007 (UTC)
[edit] References?
Perhaps this article could be expanded with a reference to a good book, or article, about the workflow of insurance (quotation->policy->claim), and the underlying laws and principles? Other articles have excellent references, which is really useful for amateurs, like myself, who likes to know more about a subject.
Well I have 2 books, one for my state (Michigan laws) and one for general (Life and Health), but the general one is written for the company I work for and so I worry if my book isn't a good reference. What do you guys think?82.93.133.130 17:48, 9 June 2006 (UTC)
I added a bit about D&O insurance, made a reference to an Answers.com article, and added a references section. I am new to editing; if any of this was done inappropriately or broke etiquette, please do not hesitate to e-mail me or put it on my Talk. BC Graham 18:57, 21 August 2006 (UTC)
- Answers.com takes its information from wikipedia, so that is circular, and not allowed
. -- Avi 19:38, 21 August 2006 (UTC)
[edit] Structural quality
There is significant opportunity for improvement in the quality of this article. Specifically, I refer to spelling and grammar. For instance, the syntax used in the gambling analogy section is highly convoluted (antecedents, negation, etc). It's difficult to parse.
I realize that Wikipedia is a collaborative effort, but I am a new user and unfamiliar with the etiquette and norms of this group; thus, I am loathe to modify the article.
Great article overall, and with a little work it could be even better in the future. —The preceding unsigned comment was added by 68.226.79.85 (talk • contribs) .
- Have at it. The article is pretty terrible. It needs to properly survey the topic and not belabor any minor details. No one has really gone after it, so it might as well be you. Why not get a login name though, so we can respond to you more easily, etc. - Taxman Talk 13:32, 22 November 2005 (UTC)
[edit] Nuclear insurance question
The question arose in Price-Anderson Nuclear Industries Indemnity Act as to whether the insurance companies (American Nuclear Insurers, based in Connecticut, and one other consortium) are legally required to have sufficient financial resources to cover the maximum possible insurance loss ($300 million in 2005, legally "all the coverage that is available"). Can anyone answer this? Simesa 20:54, 2 December 2005 (UTC)
- I'm not a lawyer or an American, my experience is more with the European insurance market, but all insurance companies operating in the U.S.A. are regulated & approved to transact business. It is a fundamental principle of insurance regulation (at least in developed financial systems of which the U.S.A. is one) that insurers have sufficient assets to make good their liabilities (which are estimated by accountants & actuaries), so yes. In practice I think you'll find that the insurers in question probably have Reinsurance in place for part of the risk so they wouldn't need to have the resources to meet that part of any loss as the reinsurers would be liable to pay for it (they would be regulated in their own countries of operation -for that type of risk it would probably be the U.K. (Lloyds) or possibly Bermuda).
- By the way I would doubt if the maximum possible loss for a nuclear accident in the U.S.A. would be as little as $300,000,000. This may be the maximum liability of the insurance policy & if this is so it is almost certain (barring massive & undetected fraud)that a major insurer would be able to meet this. AllanHainey 15:16, 23 January 2006 (UTC)
[edit] How the Insurance Company Makes Money & Rate Structure sections (DONE)
Appear highly duplicative to me. IMHO, the "How the Insurance Company Makes Money" section should be a sky high overview, while "Rate Structure" should have the details instead of having full definations of "float" in both. Joncnunn 18:17, 5 April 2006 (UTC)
Consolidated both sections into “Insurer’s Business Model" --Faperez 10:21, 30 July 2006 (UTC)
[edit] Insurance in Blackjack section
Seems totally out of place with the rest of the article to me. Add a disambig page. Joncnunn 18:39, 5 April 2006 (UTC)
- I took care of it; see changes made on http://en.wikipedia.org/w/index.php?title=Insurance&oldid=50205125 Thanks, -- Argon233 T C @ ¶ 17:27, 26 April 2006 (UTC)
[edit] Mandatory isurance
I think this article could use a paragraph on how mandatory insurance [insurance required by law and/or as a requirement for loans] came about and also how it's similar and different to traditional insurance. Joncnunn 18:39, 5 April 2006 (UTC)
[edit] Most accurate definition?
First paragraph says,
"Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium and duty of care"
'From one entity to another' -- I'm assuming this means from the individual to the insurance company, though this is not really accurate. Insurance spreads individual risk to all members of a group; the insurance company merely facilitates and manages this risk-sharing, and takes a fee for its services.
Suggested Changes:
-It should probably be changed to convey that insurance spreads risk from one entity to many others - not one entity to one other.
-The risk is not really "transferred," since the individual still shoulders some of his own risk; just less of it.
-It should specify who these "entities" are: individual subscribers, and the group of subscribers (but not the insurance company itself).
- Your understanding is incorrect. It is in fact the insurer as an entity that is legally liable to pay for the loss, not the other policy holders. So while your understanding has some elements of truth on a conceptual level, it gets it wrong where it comes to the suggested problem. There are assessment groups where the entity is not responsible to pay the loss, the whole group is, but that's not modern insurance. But of course the industry is varied and it is possible that in some jurisdictions there are assessable policies defined as insurance. To support that, you would need a reliable source to back your position. See the verifiability policy and the reliable sources guideline. - Taxman Talk 23:31, 5 June 2006 (UTC)
[edit] This article on Insurance is Weak
i am troubled reading this article. i need to revisit again to tighten up the concepts.joe 15:00, 21 July 2006 (UTC)
As someone in the insurance industry, I would like to see an Insurance Project similar to the Common Law Project. Unfortunately, I don't have much free time at the moment, but I'd help where I had time and experience. BlueNight
[edit] Some Questions
Can anyone provide information on the technology/software used in the insurance company? What are the most succesfull business practices in the insurance market? How is the technology of today being used to provide better service? cut costs?
[edit] Insurance of Contruction projects
Is any company provide Insurance to Contruction projects Kindly send details on manojkw@yahoo.co.in
[edit] Duty of care?
Not sure I follow: How is a duty of care "exchanged" in an insurance transaction? (Sorry about all the in-line comments -- figured that was what the hidden comment feature was for.)
Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of catastrophic financial loss. Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium and a duty of care.McTavidge 07:19, 18 January 2007 (UTC)
[edit] "Fairness" in the premium?
1. There must be a larger number of similar objects so the financial outcome of insuring the pool of exposures is predictable. Therefore it can calculate a "fair" -- NOT SURE HOW FAIRNESS ENTERS THE EQUATION. SHOULDN'T THE PREMIUM BE BASED ON WHAT MAKES SENSE ECONOMICALLY, BOTH TO THE INSURER (AND ULTIMATELY TO ITS SHAREHOLDERS) AND TO ITS CUSTOMERS. CHARGE TOO LITTLE AND INSURER BECOMES INSOLVENT AND/OR ISN'T GOING TO PAY ITS SHAREHOLDERS AN ACCEPTABLE RETURN; CHARGE TOO MUCH AND NO CUSTOMERS BUY. -- premium.McTavidge 07:19, 18 January 2007 (UTC)
In a ratemaking sense, "fair" refers to a premium not being inadequate, excessive, or unfairly discriminitory. If all premiums are fair, than insolvencies should rarely occur. Schoop 18:44, 5 April 2007 (UTC)Schoop
[edit] Confusing paragraph
The loss must be significant: The legal principle of de minimis dictates that trivial matters are not covered. Furthermore, rational insurance uses existing insurance when the transaction costs dictate that filing a claim is not rational. Actually, de minimis does not come into play here.--THIS IS CONFUSINGLY WRITTEN. THE READER IS FIRST LED TO BELIEVE THE DE MINIMIS PRINCIPLE GOVERNS THE MATTER; IMMEDATELY AFTERWARD WE'RE TOLD IT DOESN'T. WHAT GIVES?-- The reality is that it costs too much to insure frequent and/or small losses. It is much more cost effective to not transfer small loss potential to insurance companies by taking the largest deductible that you can stand (given adequate price reduction). As for filing small claims, if the insurance company contractually should pay for it, you should file it. --IT WOULD BE HELPFUL IF THIS COULD BE EXPLAINED. SOME PEOPLE AVOID FILING SMALL CLAIMS, THAT THEY FEEL THEY CAN COVER WITHOUT TOO GREAT A BURDEN, SO THAT THEY CAN AVOID THE PREMIUM INCREASE THEY THINK WILL FOLLOW A CLAIM, ESPECIALLY IF IT BLEMISHES AN OTHERWISE PERFECT RECORD (SOME INSURERS OFFER NO-ACCIDENT DISCOUNTS, E.G.).-- This is the difference between deciding before the contract the parameters and after following through.--THIS SENTENCE IS HARD TO UNDERSTAND -- IS THAT ECON JARGON? MIGHT BE NICE TO UNPACK IT A LITTLE.McTavidge 07:19, 18 January 2007 (UTC)
[edit] Mixing apples and oranges?
THIS PARAGRAPH (BELOW) DOESN'T KNOW WHAT IT WANTS TO BE WHEN IT GROWS UP. IT STARTS OFF SUPPLYING ONE OF THE CRITERIA FOR RISKS INSURERS ASSUME (OR NOT, DEPENDING ON WHETHER THE CRITERIA ARE SATISFIED). AT THE MENTION OF INSOLVENCY, HOWEVER, IT DETOURS INTO STATE GUARANTY FUNDS (US). RATHER THAN STICKING WITH REMEDIES FOR INSOLVENCY, IT THEN U-TURNS INTO PRE-INSOLVENCY STANDARDS/REGULATIONS (UK COMPANIES ONLY). SOLVENCY REGULATION (BOTH US AND UK AND FOR THAT MATTER WHEREVER ELSE ANYONE KNOWS ANYTHING ABOUT IT) AND POST-INSOLVENCY GUARANTEE/REMEDIAL REGIMES HAVE A LEGITIMATE PLACE IN THIS ARTICLE, BUT I SUBMIT THEY'RE MISPLACED HERE AND IN ANY CASE COULD DO WITH MORE THAN A SENTENCE EACH.
The loss must not be catastrophic: If the insurer is insolvent, it will be unable to pay the insured. In the United States, there is a system of guarantee funds that operate at the state level to reimburse insureds whose insurance companies have become insolvent.[2] This program is run by the National Association of Insurance Commissioners (NAIC).[3] In the United Kingdom, the Financial Services Authority (FSA), which regulates all insurance companies, has its own standards of solvency which are legally required to be adhered to.McTavidge 07:19, 18 January 2007 (UTC)
[edit] Materialized utility
Could someone (presumably an economist) unpack the term materialized utility, as in the following paragraph?
Finally, claims and loss handling is the materialized utility of insurance. Claims handling management in insurance companies is to balance the triangle elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. Within this triangle, insurance fraud is a major business risk to manage and overcome.McTavidge 03:49, 19 January 2007 (UTC)
[edit] Gambling insurance
I was under the impression that the problem with insuring speculative risks like gamblers and stocks is that the element of chance is too great, the risk of loss not predictable enough to price these risks, not that these risks have an element of intentionality, as suggested by the excerpted paragraph below. Besides, what's intentional about stock price movements anyway?
Additionally, “speculative risks” like those incurred through gambling or through the purchase of company stock are uninsurable. Insurable risks should have **accidental and not intentional** losses, and they should have economically feasible premiums, meaning that chance of loss must not be too high.McTavidge 04:06, 19 January 2007 (UTC)
- It is not that the risk of loss is not predictable (for example, calculating the odds on a bet on the toss of a coin is far easier to do than calcualting the odds of an automobile accident) but that since most 'speculative' losses are in some sence controllable, they are not fortuitous. Gambling is not insurable also because gambling contracts are not enforceable in law, as I understand it, and it is possible to insure against declines in portfolios of stocks, or at least it was in the not too distant past. --Bob Herrick 18:00, 1 March 2007 (UTC)
- If so, should the sentence in question be revised? McTavidge 23:54, 1 March 2007 (UTC)
[edit] History question
Anyone know the unit of weight in the excerpt below?
Achaemenian monarchs were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (the beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (an Achaemenian gold coin weighing 8.35-8.42 --WHAT UNIT?), the issue was registered in a special office. McTavidge 04:36, 19 January 2007 (UTC)
- I got curious about that too. It looks like this excerpt was cribbed from an article on IRAN-LAW and 2 paragraphs should probably be removed or rewritten. For now, I'm removing the weight reference and adding a citation. I'd bet a few Derrik the weight was grams, that would be a reasonable size for a coin, heavier than a US nickel - 10,000 Derrik at 8.4 g/each = 84 Kg, a reasonable size for a "huge freaking impressive bag of money" that two men could move. stephan.com 21:08, 24 October 2007 (UTC)
[edit] Non-sequiturs
The following paragraphs are at the end of the history of insurance section. While interesting topics, they're not much about history. Where should they go?
In the United States, regulation of the insurance industry is highly Balkanized, with primary responsibility assumed by individual state insurance departments. Whereas insurance markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through a national insurance commissioners' organization. In recent years, some have called for a dual state and federal regulatory system for insurance similar to that which oversees state banks and national banks.
In the state of New York, which has unique laws in keeping with its stature as a global business center, Attorney General Eliot Spitzer has been in a unique position to grapple with major national insurance brokerages. Spitzer alleged that Marsh & McLennan steered business to insurance carriers based on the amount of contingent commissions that could be extracted from carriers, rather than basing decisions on whether carriers had the best deals for clients. Several of the largest commercial insurance brokerages have since stopped accepting contingent commissions and have adopted new business models.McTavidge 04:43, 19 January 2007 (UTC)
[edit] Additional categories of insurance
I added sections on builder's risk and marine cargo/marine insurance. Dharmasattva 02:14, 25 January 2007 (UTC)Dharmasattva
[[BENEFITS OF INSURANCE]]
Benefits of insurance given below; • Indemnification of fortuitous losses. • Peace of mind • Source of investment funds. • Loss prevention. • Enhancement of credit. Indemnification of fortuitous losses
By virtue of the insurance the losses which occurred due the fortuitous circumstances are indemnified by the insurance companies against the claims. Thus the insurance help the owner to protect himself against the uncertainty of the circumstances.
Peace of mind
Insurance provide the peace of mind to the insured party. Because all the risk is transferred to the insurance company and in case of any incident the insurance company would be liable for the indemnification of the losses. It covers the potential losses which can be arising due the uncertainty of environment.
Source of investment of funds
Insurance is also a source of investment of funds because as we paid insurance premium on instalment bases and the insurance company use it for investment purpose. And profit is also shared with the client as per policy. Loss prevention
Insurance also prevent client form any future loss. Because by the insurance policy risk of loss is transferred to the third party (insurance company). So client can prevent itself from any loss which can be acquired in future. Without insurance the person have to bear the whole loss but in case of insured person the loss transferred to insurance company which is now responsible for the loss.
Enhancement of credit
Enhancement of credit means that now client can be more creditworthy for the insurance company then before. Because he is the regular client and he have a policy with the insurance company. And has a faith with the company as well by this the creditworthiness of the client also enhanced. By Rizwan Anjum haily College LHR. —The preceding unsigned comment was added by 202.174.159.106 (talk) 11:52, 28 February 2007 (UTC).
[edit] Replacement of first section
I replaced the first section with a more complete discussion abstracted from one of the texts available to me. The four points in the original section were incomplete, I thought, and the new section incorporates those ideas, plus others.
It is my intention to add a new section that will discuss the question of what constitutes insurance from a legal and accounting perspective.
- Done --Bob Herrick 23:32, 5 March 2007 (UTC)
- Rcherrick, you might want to be careful not to quote the texts. That could violate a copyright. Also, how US centric is your discussion? If it is primarily US based, we might want to separate it out as a stand alone article.--Nowa 01:49, 6 March 2007 (UTC)
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- I am comfortable that the brief exerpts from FAS and SAP are not objectionable - these are routinely quoted in many contexts.
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- The section from Mehr and Cammack is paraphrased in my own words (any inaccuracies are mine not theirs).
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- The risk transfer discussion is US Centric as it focuses on US GAAP and US SAP, however IAS will generally result in similar findings. Country by country discussion of statutory provisions for insurers and reinsurers would be tedious, and difficult to get right. I could try Bermuda, but the discussion of Bermuda accounting would be best left to someone else. I have a basic understanding of the issues, but as they only apply to insurers and reinsurers, they are uninteresting for end-users, which is my area of expertise (such as it is).
--Bob Herrick 16:46, 12 March 2007 (UTC)
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- I expect to add a discussion of accounting under IAS in the coming months, however, the topic is not yet settled by IAS, so the discussion will need to be about the process more than about the conclusions. FAS is also relooking at certain aspects of insurance accounting under GAAP, and there is also the planned convergence to consider. --Bob Herrick 17:12, 20 July 2007 (UTC)
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hi. 2007 03 10 this first section can still be made more abstract andmore general.
also, risk too large" belongs near the beginning. i removed it from the gambling section. i.e.
most homeowner's insurance does not cover floods. A company that sells homeowner's insurance in a given city can accurately estimate the number of claims it would have to pay because of fires, tornadoes, and other smaller-scale disasters. However, a flood may impact a large percentage of a city and the company might be unable to pay such a large number of claims and become insolvent. For the same reason, losses due to war and earthquakes are generally excluded. In the case of floods and earthquakes (which occur on a smaller scale than war does), homeowners can purchase separate insurance from national companies with larger resources and a greater ability to distribute the risk across regions rather than individual buildings.
creates risk through the bet itself. that they would not otherwise be exposed to, transfers potentially large risk to a carrier who can afford to support the risk, and thereby
[edit] excess
what does it mean when they say excess? for example, i am looking at a medical insurance policy and it says Excess : £100.00
[edit] Use of Excess
The term has different meanings depending on context. In the context you cite, it is equivalent to a deductible - the amount you will pay out of pocket before the insurance begins to pay. It is similarly used in the phrase 'excess insurance,' which, as opposed to 'primary insurance' is insurance that begins after a lower level policy has paid out it's limit - i.e., the excess policy is in some sense 'above' the primary policy. More than one excess policy can exist; in that case we speak of 'layers' of coverage, the first of which is a primary, followed by a first excess, second excess etc.
The equivalent term in investment banking is 'tranche.'
Note that one could fine a 'primary' policy that had 'excess' (higher layer) above it and contain an 'excess' (deductible).
The use of the term 'excess' is usually found in the UK and sometimes, because London is a center for a lot of European insurance, on the Continent. You might find some of us American's that use the term, but we would be affected types.
You will also find the term 'franchise' used as a term for deductible, although technically it is a very specific type of deductible in English usage. In France, if I recall correctly, you would find 'franchise' quite commonly used. --Bob Herrick 18:13, 13 April 2007 (UTC)
[edit] What is a hardcover insurance?
Hi Folks!
A friend of mine lately won a major sum in the Irish National Lottery and asked me, what a hardcover insurance is.
Apparently it means that the prize money as a whole has been insured against theft etc., and so there can be nothing deducted from the total sum. Therefore my friend has to pay the charge in advance, as the money now is insured in his name.
I have never heard about this before. And I also didn't find it mentioned here. Might this be a scam?
Best regards
Thor
- It's a lottery scam to obtain fraudulent fees before the non-existent 'prize' can be collected. Your friend should run a mile. -- zzuuzz (talk) 13:02, 29 May 2007 (UTC)
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- Yes, I thought so. But in principle, does something like a hardcover insurance exist at all, or is it a mere phantasy?
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- Thanks
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- Thor
[edit] Reorganization
It appears to me that this article could use a more coherent flow to it. I am thinking, off the top of my head, about something like the following ToC
- Definition of Insurance
- History of Insurance
- Principles of Insurance
- Categories of Insurance
- Personal Lines
- Commerical Lines
- Types of Insurance
- Life and Health
- Property and Casualty
- Credit
- How Insurance is Delivered
- Mutual Insurance Companies
- Stock Insurance Companies
- Reciprocals
- Group Vehicles
- Captive Insurance Companies
- Agents, Brokers, Direct Writers and Self-procurement
- Regulation of Insurance
- Admitted Insurance
- Non-admitted Insurance
- Foreign Insurance
- Issues in Insurance
Many of these topics are already covered piecemeal within the article and some are covered elsewhere in Wikipedia. Some appear to be missing entirely. I would appreciate some suggestions on the TOC above (too much, too little, what's missing?). Is this a good idea? Anyone like to help?
Bob Herrick 22:22, 25 October 2007 (UTC)
[edit] Self Insurance
The definition of self insurance in the article reads:
Self Insurance is protection against loss by setting aside one's own money. This can be done on a mathematical basis by establishing a separate fund into which funds are deposited on a periodic basis. Through self insurance it is possible to protect against high-frequency low-severity losses. To do this through an insurance company would mean having to pay a premium that includes loadings for the company's general expenses, cost of putting the policy on the books, acquisition expenses, premium taxes, and contingencies.
I believe this definition is too restrictive as follows:
- Many entities that self insure do not "set aside" any money at all
- Separate funds are, I think, less common than separate accounts or registers
- I do not believe the word "protect" is apropos. The net risk position of the entity does not change if it declares itself "Self insured."
- While insurance contains the frictional costs enumerated, self insurance contains implicit costs that may be similar, e.g., administation and payment of internal claims, implicit capital charges that result where the liquidity position of the entity alters to match the volatility introduced by the decision to self insure
There is also a distinction that should be recognized between voluntary self-insurance (the entity could purchase insurance and chooses not to) and involuntary (insurance is not available in type or amount satisfactory to the entity). In some sense everyone 'self insures' because they are unable to purchase unlimited protection in areas where unlimited exposures exist (e.g., general or personal liablity)
The following would be my rewrite. Comments, please?
Formal Self Insurance is the deliberate decision to pay for otherwise insurable losses out of one's own money. This can be done on a formal basis by establishing a separate fund into which funds are deposited on a periodic basis, or by simply forgoing the purchase of available insurance and paying out-of-pocket. Self insurance is ususally used to pay for high-frequency, low-severity losses. Such losses, if covered by conventional insurance, mean having to pay a premium that includes loadings for the company's general expenses, cost of putting the policy on the books, acquisition expenses, premium taxes, and contingencies. While this is true for all insurance, for small, frequent losses the transaction costs may exceed the benefit of volatility reduction that insurance otherwise affords.
[edit] Article re-write
I have begun a complete rewrite of this article at my sandbox if anyone would like to take a look and offer help/comments, feel very welcome to do so. As of now it is about 20% done. Where I can, I am moving existing sections around and editing them up a bit.
Bob Herrick 19:22, 12 November 2007 (UTC)
- I like your proposed outline. I'd like to suggest a further breakdown for the section "Types of Insurance." The current section has both lines of coverage (or types of coverage . . . or whatever you want to call them, but P&C, Life, Health, Homeowners, Marine, etc.), and forms of coverage (or types of funding, or forms of contract, etc.), such as retrospectively experience rated, self insurance, social insurance, reinsurance, etc. These are two fundamentally different sets of ideas. I'd like to suggest something along the lines of:
- 5. Types of Coverage
- a. Life and Health
- b. Property and Casualty
- c. Credit
- 6. Forms of Insurance
- a. Fully-insured
- 1) Term
- 2) Permanent
- b. Experience Rated
- c. Self-insurance
- d. Reinsurance
- a. Fully-insured
- Those aren't the best categories, but I hope they convey the idea. It would really help if there were a section that organized these different funding approaches in a rational fashion —Preceding unsigned comment added by 146.145.79.247 (talk) 17:34, 10 December 2007 (UTC)
I agree that this article sorely needs a re-write. It's far too technical and sounds like it was written by an insurance company, not to mention the criticism of the companies themselves are too short by any reasonable standard or that the there is no mention of insurance fraud. 68.176.131.122 (talk) 16:53, 26 November 2007 (UTC)
[edit] Redlining
The last two paragraphs of "redlining" need citations. The information seems accurate, it's just unsourced.Reinoe (talk) 16:15, 8 January 2008 (UTC)
[edit] Moving Dental Insurance out of the Controversies Section
I moved the Dental Insurance subsection out of the "Controversies" section and up into the list of different types of coverage (and put it under health insurance, since that's how it's generally classified in the US). Someone's moved it back down into the controversies section. I don't understand that, because I don't see any controvesy identified regarding dental insurance, and it's not included in the list of different types of coverage. I don't want to start an edit war, though, so I'd like to suggest that we talk about it. Is there a reason to put dental insurance under Controversies? If so, we should probably do a better job of identifying what the controversy is. —Preceding unsigned comment added by 146.145.79.247 (talk) 16:20, 24 January 2008 (UTC)
[edit] Gambling's relevance
Other than uncertain cash flows, Gambling and insurance practices today are unrelated. The science of probability had its start in games of chance, but that belongs in the probability article, not here. -- Avi (talk) 09:34, 7 March 2008 (UTC)
- Gambling and insurance are fundamentally different. However, this is a comparison that's often made by laypeople - "the insurance company is gambling that you won't die young [get sick, have an accident, etc.]." I've even heard people in the insurance industry reference gambling in discussions of how insurance works (which is frustrating, because it creates more misconceptions than true understanding). It seems appropriate to have a section in this article that addresses the differences between the two. I would suggest moving it further down, though, because the original position appeared to give to much prominence to the analogy.EastTN (talk) 17:26, 10 March 2008 (UTC)
[edit] Cleanup
As people can see, I've done a bit of cleaning on this article. The main changes are,
- putting in a few "main article" headers underneath the sections - this is important in a general article like this one, which must necessarily summarise the material and encourage people to expand on the sub-pages
- adding a few pictures - it looks better
- taking the exclusively US material and moving it to a newly created Insurance in the United States page - this needs work on its own
- reordering a few sections, to put things on the same issues under the same sections
- adding a header calling for more source citations - it's a long article, and I see there's already a few in the notes section; but more I think is needed
I hope it helps, and the page will further develop in a more structured way. There's a lot of good material here already. Wikidea 15:10, 15 March 2008 (UTC)
[edit] An unreverted removal of text
Just a heads up: the text removed in this edit was never put back. However I couldn't find a way to re-add it, because of the cleanup that has been done since. Graham87 06:52, 26 March 2008 (UTC)
