Insuring the uninsurable : brokers and incomplete insurance contracts

How do markets spread risk when events are unknown or unknowable and where not anticipated in an insurance contract? While the policyholder can "hold up" the insurer for extra contractual payments, the continuing gains from trade on a single contract are often too small to yield useful coverage. By acting as a repository of the reputations of the parties, we show the brokers provide a coordinating mechanism to leverage the collective hold up power of policyholders. This extends both the degree of implicit and explicit coverage. The role is reflected in the terms of broker engagement, specifically in the ownership by the broker of the renewal rights. Finally, we argue that brokers can be motivated to play this role when they receive commissions that are contingent on insurer profits. This last feature questions a recent, well publicized, attack on broker compensation by New York attorney general, Elliot Spitzer. Klassifikation: G22, G24, L1

Insuring the Uninsurable: Brokers and Incomplete Insurance Contracts

How do markets spread risk when events are unknown or unknowable and where not anticipated in an insurance contract? While the policyholder can "hold up" the insurer for extra contractual payments, the continuing gains from trade on a single contract are often too small to yield useful coverage. By acting as a repository of the reputations of the parties, we show the brokers provide a coordinating mechanism to leverage the collective hold up power of policyholders. This extends both the degree of implicit and explicit coverage. The role is reflected in the terms of broker engagement, specifically in the ownership by the broker of the renewal rights. Finally, we argue that brokers can be motivated to play this role when they receive commissions that are contingent on insurer profits. This last feature questions a recent, well publicized, attack on broker compensation by New York attorney general, Elliot Spitzer.Incomplete Insurance Contracts, Brokerage, Contingent Commissions, Reputation

Insuring non-verifiable losses

Insurance contracts are often complex and difficult to verify outside the insurance relation. We show that standard one-period insurance policies with an upper limit and a deductible are the optimal incentive-compatible contracts in a competitive market with repeated interaction. Optimal group insurance policies involve a joint upper limit but individual deductibles and insurance brokers can play a role implementing such contracts for the group of clients. Our model provides new insights and predictions about the determinants of insurance

Pricing catastrophe insurance derivatives

SIGLEAvailable from British Library Document Supply Centre-DSC:5300.405(no 400) / BLDSC - British Library Document Supply CentreGBUnited Kingdo

Greenstick fractures of the middle third of the forearm. A prospective multi-centre study.

BACKGROUND: Greenstick fractures suffered during growth have a high risk for refracture and posttraumatic deformity, particularly at the forearm diaphysis. The use of a preemptive completion of the fracture by manipulation of the concave cortex is controversial and data supporting this approach are few. AIM: Aim of this study was to determine the factors which predispose to refracture and deformities, and to define therapeutic strategies. METHODS: We prospectively gathered clinical and radiographic data over a period of one year on greenstick fractures of the middle third of the forearm in children as part of a multi-centre study. Endpoint was a follow-up visit at one year. Radiographic deformity, state of consolidation at resumption of physical activities and refracture rate were analysed statistically (ANOVA, Student's t-test and Pearson's chi-square test) with regard to patient age, gender, fracture type, therapy and time in plaster. RESULTS: We collected the data of 103 patients (63 boys, 40 girls), average age 6.6 years (1.3-14.5 years), the vast majority of whom had a combined greenstick fracture of the radius and ulna. 6.7% of the patients sustained a refracture within 49 days (29-76) after plaster removal. They were significantly older (p=0.017) with a significantly higher incidence of manual completion of the fracture with radiographic signs of partial consolidation (p=0.025). Residual deformities were significantly smaller after completion of the fracture compared to reduction without completion (p=0.019) or plaster fixation alone (p<0.005). CONCLUSIONS: Completion of a greenstick fracture does not prevent refracture. Nevertheless, it diminishes the extent of secondary deformities in cases where the primary angulation exceeds the remodelling capacity. Prevention of refracture should include a routine radiographic follow-up 4-6 weeks after injury with continuation of plaster fixation in cases of partial consolidation