We turn now to the risks assumed by malpractice insurers when they underwrite policyholders’ liability and by investors who contribute capital to the insurance firm— classically, the stockholders in a for-profit firm. A distinction is often made on whether a risk is diversifiable or non-diversifiable. Diversifiable risks occur largely independently of one another, like successive flips of a coin. Thus, pooling individual risks reduces the risk. When enough risks are pooled, variation in outcome is diversified away and aggregate experience becomes highly predictable, like the percentage of heads in many tosses of a coin. (more…)

Stock Insurance Companies

The stock company provides the benchmark against which the other organizational forms may be compared.The functions of owner-risk bearer, manager, and policyholder are separate. Inefficient firms may be bought out by others that can make money by improving the firm’s performance. Conflicting incentives between equity-holders and managers can be controlled by tying the manager’s pay to the performance of the company’s stock, appointing some of the managers to the company’s board, promoting and increasing the salaries of the good-performing managers, and/or placing restrictions in the company charter to limit managerial discretion. (more…)

The Health Research Educational Trust (HRET) and the Kaiser Family Foundation conduct an annual survey of employers concerning their health insurance coverage. A summary of the findings is readily available on the Kaiser Family Foundation website (http://www.kff.org/insurance/7031/index.cfm) and in annual summary articles by Jon Gabel and colleagues in a fall or winter issue of Health Affairs. The survey is nationally representative of public and private employers, and is drawn from the Dunn and Bradstreet listing of U.S. firms. (more…)

The process needed to obtain social security claims benefits may take some time. The original request may 6-8 months for a decision. In case of rejection of the complaint, there will be a called an application for review may be further 4-6 months. The percentage of cases granted at this level, only 18%. The call of the request for hearing may take be another 18 months before the case is to be assessed before the administrative law planned. About 70% of decisions on the results at a hearing in the award of benefits. It pays to be relentless, but the procedure can take many years. (more…)

The Unfair Claim Settlement Practices Act provides that no insurer may engage in unfair claim settlement practices. Examples of unfair claim settlement practices are:

• The intentional misrepresentation to a claimant any pertinent facts or policy provisions which relate to the coverage at issue (more…)