Posts Tagged ‘Insurance’

Is Health Insurance Really Insurance – Or Something Else?

Sunday, May 23rd, 2010

Recent passage of the Obama administration’s health-care “reform” package prompts reflection on the underlying meaning of health insurance. This leads to a better understanding of the causes of health-care inflation and proposed remedies.
What is Insurance?
Insurance is a process for the transfer and amelioration of risk. Risk is transferred from risk-averse people to risk managers. The managers are qualified professionals who either bear the risk or reduce it to manageable dimensions by pooling large numbers of risks.
Risk is defined by the variability of possible outcomes. An insurable risk is unpredictable at the individual level but predictable in the aggregate. That distinction [...]

Why Aren’t Annuities More Popular?

Sunday, May 2nd, 2010

Annuities have been around forever. Anybody with any experience in investments is familiar with them. They’re issued by insurance companies, the epitome of financial soundness. Fixed annuities are considered conservative investments. And, to top it all off, their signature feature and unique claim to fame is the ability to provide guaranteed income for life.
Yet, according to one reliable source, “the majority of modern annuity customers use annuities only to accumulate funds and to make lump-sum withdrawals without using the guaranteed-income-for-life feature.” Another source notes that “voluntary annuitization of income is rare.” As a source of income in retirement, private annuity [...]

“In Fed We Trust” Inspires No Trust

Sunday, April 25th, 2010

David Wessel is the Economics Editor of The Wall Street Journal. This is the most successful newspaper in the U.S. It is the leading financial publication in the world. Economics is to the Journal as algebra is to mathematics. And David Wessel is THE Economics Editor.
 That fact is at least as terrifying and depressing as his account of the financial crisis.
 AIG as “Casino”
Mr. Wessel has recently made the rounds of talk shows promoting his story of how the Federal Reserve and Chairman Ben Bernanke saved the world from the next Great Depression. In Fed We Trust is subtitled “Ben Bernanke’s [...]

What Is It With Insurance Companies, Anyway?

Tuesday, February 9th, 2010

A film about insurance companies could aptly be titled Rashomon. Commentators and public figures each paint a different picture of insurance companies, each one viewed through a special-interest lens.
 Politicians cast insurance companies as characters in a morality play. The companies are villains who earn monopoly profits at the expense of their customers. Only the efforts of idealistic lawmakers and well-meaning regulators prevent the insurance companies from defrauding their policyholders.
 Internet savants portray insurance companies as clever malefactors who profit from knowledge denied to the rest of the world. Fortunately, the savants are on the job telling us the “things the insurance [...]