Talk:Insurance/Archive 1

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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.

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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.

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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.

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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)

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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.

Paul, in Saudi

what about insurance brokers?

such as Marsh&McLennan and Aon?

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)

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.

Lack of Marine Insurance & Air Cargo Insurance

Lack of Marine Insurance and Air Cargo Insurance. Need any expert from Insurance Business to input.

Added

Added statistics and an external link. Johnwhunt 00:06, 22 Mar 2005 (UTC)

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
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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 & actuarial professions	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; puts & calls on 9/11	16 Jun 2005	~	~
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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	~	~
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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	~	~
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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)

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??

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.

Discriminatory policy-building

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.

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)

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.

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)

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)

How the Insurance Company Makes Money & Rate Structure sections

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)

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)

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)

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)