Many readers of this site come here because they are interested in or worried about bird flu. Bird flu isn't the only thing people are worried about and no doubt there are sites that talk about each of them --asbestos or nanotechnology or genetically modified foods, for example. Most of us are glad we only have room for a few of these worries. But some people worry about all of them as part of their jobs. Actuaries -- the professionals who help insurance companies estimate their risks and what to charge for premiums -- do this for a living.
While nanotechnology and bird flu are as different as can be, if you are an actuary they are in the same pile of problems: uncertain risks.
Al Fine, managing director, Willis Risk Solutions, said the avian flu is an emerging exposure, but it is too soon to tell whether it will be a Y2K or 9/11-type event.
"Everyone knows what the potential of an avian flu pandemic could be. The attack rate should it become out of control would be potentially 25 percent of the workforce on a global basis. There would be broken supply chains and border closings," Fine said.
However, from the financial perspective, he noted that the potential loss impact of an avian flu pandemic on the insurance industry remains uncertain.
"While workers compensation/general liability flu claims would go up, the workers' compensation/general liability non-flu-related claims would go down as businesses would shrink or close," Fine said.
Avian flu has significant potential coverage implications for insurers and reinsurers, he noted. "There is the possibility of creating new exclusions and the opportunity to create new policies that explicitly provide coverage."
"Eventually these things will be resolved in court and then the issue begins there," Fine noted. (Insurance Daily)
It is an interesting perspective. While we worry about how to solve the problems created by a pandemic, the insurance industry has the solution. We'll resolve it in court.
Next case.
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Hmmm ... it seems to me that you're inappropriately conflating several distinct types of problems simply in order to be able to make a dismissive and pointless comment.
And your prescription for the insurance industry would be ... ?
Scott: You can read it that way or the way it was meant. That different people have far different concerns. In this case the insurance industry's concerns center on covering their risks, not in prevention. If they could figure out the right premium, they'd be done, but the rest of us would not be. Of course they are better off if it doesn't happen, but their main concern is to make sure they have coverfed themselves if it does. The problems in coverage can be resolved in court.
""While workers compensation/general liability flu claims would go up, the workers' compensation/general liability non-flu-related claims would go down as businesses would shrink or close," Fine said."
So would their revenue stream "shrink or close"! WC assessments are based upon payroll and relative risk. Shrink the assessment base, how you going to pay your claims?
""While workers compensation/general liability flu claims would go up, the workers' compensation/general liability non-flu-related claims would go down as businesses would shrink or close," Fine said."
So would their revenue stream "shrink or close"! WC assessments are based upon payroll and relative risk. Shrink the assessment base, how you going to pay your claims?
"We'll resolve it in court."
That's going to take awhile since 25-40% of 'the court' will be ill.
or, the percentage ill will be the same as the percentage dead...
(and/or, the public will be so fed up with the govt that they throw all the surviving bums/VIPs out, and start over with -what?- little tribes?
Gee, living through "interesting times" is so..."interesting"...)
Ottawa Guy: insurance companies cover their known future exposures with assets under management. They don't pay this year's claims out of this year's payments. This is, I'm sure, very heavily regulated.
At this very moment 1 out of 10 dollars of aboveground liquid assets is controlled by an insurance company.
In the late 90's the majors all decided that hotshot money managers would make them so much money that they could underprice premiums to gain market share.Premiums went up after the crash to cover their investment losses. Oops.