RiskProf

At War with the Weather

 

	Four years in the making…. I just received my copy in the mail today from MIT Press.  It is available on Amazon for $ 37.12.  What a bargain. In the fine print on the cover you can see while I am not a primary author I do get the “with” treatment.   Other notables are Neil Doherty, bob Klein and Mark Pauly.
What is nice about the Amazon listing is that there are a ton of blurbs. However, there is no Kindle edition yet.  Nor are there any free peeks. You’ll just have to wait.

My Congressional Testimony Part I (The Back Story)

I have been teaching a special three week term.  Each class meets about 3 hours per day and I am teaching two. (I just finished yesterday.)  At the beginning of the term I was asked to testify before Congress regarding my opinion about the future of insurance regulation.  I was teaching intensively six hours a day and I was getting a little brain fried, so I said yes.  That is when the trouble started.

I received the official invitation from the subcommittee at 5:00pm on Friday. I didn’t read the fine print until Sunday.  I had to have 100 copies of my testimony to the subcommittee 48 hours prior to the hearing on Wednesday.  That was not a big deal—it just meant I had to finish writing up my testimony by Sunday night and then I would overnight a package to DC.  Well, thanks to the anthrax scare of late 2001 --

New book

Last week I had the privilege of testifying before Congress on the future of insurance regulation (more on that later).  Today, I received a copy of a book edited by Bob Klein and me with the same title.

It does not appear to be on Amazon -- which just seems strange to me.  It is also missing from the front page of Brookings Press, but  you can order a copy here.  I am not impressed with their website as there is missing information on the book site. 

What Does Chicago Have to Do with Florida?

They both are contemplating policies that will have a substantial effect on business location decisions. 

One of the things I’ve noticed (so this means that it is a not-too-scientific conclusion) is that politicians rarely believe that a company will leave a state if business conditions become onerous.  Politicians say things like “Our market is too important for companies to ignore it,” or “The companies are just doing this to extract better treatment from us.  The companies are [put your favorite inflammatory adjective here] profitable and this threat is not real.” 

In the insurance sector there have been numerous examples of state markets “crashing” because of regulatory behavior.  For example, New Jersey has recently resurrected its auto market as is evidenced by the entry of a large number of companies.  It was near death due to strangulating price regulation and regulatory induced adverse selection and moral hazard.  South Carolina had a similar problem, but experienced new entrants after a change of regulatory heart.  The Massachusetts auto market is currently on life support as so many companies have left.  I may be wrong, but there may no longer be a national company presence left in Massachusetts selling auto coverage.  Florida’s homeowners market is similarly in dire straits and its long-run outlook is not too good.

So is it surprising that Big Box stores (Walmart, Lowes, and Target according to this Chicago Tribune article) would cancel plans to enter the city’s market (or to actually leave the market) to avoid a significant increase in the city's minimum wage? Just think about the value of those lost jobs and the correlated destruction of property values this will cause in Chicago. In this case we often talk about the cost of increasing the minimum wage cost as being born by the unemployed (in terms of higher unemployment), but we also have the loss of the value of being able to shop at a nearby big box, as well as the loss of economic development arising near these stores.

via Lynne Kiesling at the Knowledge Problem.

Insurance in China

Via The Shanghai Daily:

China issued rules to ease approval controls of domestic property insurers' new policies and fee rates as part of efforts to boost product innovation and operational efficiency.

It seems to have worked (Via Marginal Revolution):

Some Chinese insurance companies are taking a big chance on the possible spread of avian influenza among humans as an opportunity to expand their business. Beijing Minsheng Life Insurance on November 7th was first to launch a policy that would pay the insured if they are infected by the H5N1 virus. Four days later, Shenzhen based Hua-an Property Insurance followed. The Hua'an policy costs 100 yuan for each 200,000 yuan of compensation. It is valid for a year for anyone aged 3 to 70. Analysts say the odds are that the two insurers will make money given what they consider is the low probability of a serious pandemic.

Yeti

Meet the reason why I have not been able to blog (or sleep) recently.

However, I imagine I will be blogging about Pet Insurance in the not too distant future.

Rajeev is Thinking What I'm Thinking

via Prof Bainbridge …

"The only problem would be if Bush picked someone who is a crony or doesn't have experience," said Rajeev Dhawan, director of economic forecasting at Georgia State University, since previous Fed chairs all came from banking or economic backgrounds. (link).

I think we should be looking at previous heads of the Texas Bankers Association or the Texas Department of Banking or the Texas Cosmetology Advisory Board.  At least these last guys are all rocket scientists.