PROTEINS pV AND pVIII ENCODED BY BOVINE ADENOVIRUS-3 ARE POTENTIAL VIRAL SUPPRESSORS OF THE INTERFERON RESPONSE

Bovine adenovirus 3 (BAdV-3), which belongs to the Mastadenovirus genus, is a non-enveloped virus with an icosahedral capsid of 75 nm diameter, which wraps a double-stranded linear DNA genome with size of 34,446 base pairs (Reddy et al., 1999). It has been studied for potential application as gene delivery vector (Zakhartchouk et al., 1999). But one of the major limitations of adenovirus vector application is the induction of innate immune response. It has been reported that multiple adenoviral components could be detected by several host sensors leading to multi-layered innate immune response, which limit the viral infection (Hendrickx et al., 2014a, Thaci et al., 2011). Like many other viruses, it has also been shown that adenoviruses have developed strategies to modulate the innate antiviral by expression of adenoviral early proteins E1A, E1B, E3, E4 as well as structural proteins pVI and pVII (Avgousti et al., 2016, Burgert et al., 2002, Schreiner et al., 2012). Here, the objective of this study is to identify BAdV-3 viral proteins that are involved in regulating the primary signaling cascade of innate immune response. This could provide insight into methods of engineering BAdVs in future with attenuated innate response and enhanced vaccine delivery features. The initial luciferase reporter assay results of monitoring type I interferon (IFN) response suggest that several BAdV-3 viral proteins may act as potential suppressors of the interferon response. Since both pV (a core protein connecting the viral capsid and DNA genome) and pVIII (a structural protein connecting the core with the viral capsid) significantly reduced the expression of luciferase due to reduced activation of IFN- promoter in both cell lines tested, we choose pV and pVIII for further analysis (Ayalew et al., 2016, Gaba, 2016). Overexpression of pattern recognition receptors (RIG-1, MDA-5, TLR-3) did not increase the IFN- activity in cells expressing pV, suggesting that pV acts at a common step(s) of IFN- signaling pathways used by different PRRs. Overexpression of TBK1 but not IKK significantly down-regulated the IFN- promoter activity in pV expressing cells suggesting that pV may suppress the activation of IFN-β promoter by targeting the activity down-stream of TBK1 activation including activation of interferon regulatory factor(s) (IRF) or at the level of IKKε kinase activation. Using co-immunoprecipitation assays, we demonstrated that pV interacts with IRF3. Further analysis using Western blotting and immunofluorescence microscopy suggested that expression of pV leads to significant reduction in the phosphorylation and translocation of transcription factor IRF3 to the nucleus. These results suggest that BAdV-3 pV modulate the activation of IFN- promoter by affecting the required activation of IRF3 for its transcription activation function. Although pV significantly reduced the transcription factor NF-kB or IRF7 responsive promoter activity, there was no effect on the nuclear translocation of NF-kB and IRF7 in the presence of pV, suggesting that pV may not act to modulate IFN- promoter activity by targeting NF-kB and IRF7 transcriptional factors. Similar experiments using overexpression of different PRRs (RIG-1, MDA-5, TLR-3) or kinases (TBK1 and IKKε) in pVIII expressing cells suggested that pVIII may act down-steam of TBK1 and IKKε in the signaling pathway of IFN- promoter activation. Moreover, although pVIII significantly reduced the transcription factor NF-kB responsive promoter activity, there was no effect on the nuclear translocation of NF-kB in the presence of pVIII, suggesting that pVIII may not act to modulate IFN- promoter activity by targeting NF-kB and IRF7 transcriptional factors. Further experiments are needed to explore the possibility that pVIII interferes with the DNA binding activity of IRF3 by assessing the function of CBP/p300 transcriptional co-activating proteins

Insurance loss coverage and social welfare

Restrictions on insurance risk classification may induce adverse selection, which is usually perceived as a bad outcome, both for insurers and for society. However, a social benefit of modest adverse selection is that it can lead to an increase in `loss coverage', defined as expected losses compensated by insurance for the whole population. We reconcile the concept of loss coverage to a utilitarian concept of social welfare commonly found in economic literature on risk classification. For iso-elastic insurance demand, ranking risk classification schemes by (observable) loss coverage always gives the same ordering as ranking by (unobservable) social welfare

Insurance loss coverage under restricted risk classification: The case of iso-elastic demand

This paper investigates equilibrium in an insurance market where risk classification is restricted. Insurance demand is characterised by an iso-elastic function with a single elasticity parameter. We characterise the equilibrium by three quantities: equilibrium premium; level of adverse selection (in the economist’s sense); and “loss coverage”, defined as the expected population losses compensated by insurance. We consider both equal elasticities for high and low risk-groups, and then different elasticities. In the equal elasticities case, adverse selection is always higher under pooling than under risk-differentiated premiums, while loss coverage first increases and then decreases with demand elasticity. We argue that loss coverage represents the efficacy of insurance for the whole population; and therefore that if demand elasticity is sufficiently low, adverse selection is not always a bad thing

Insurance loss coverage under restricted risk classification

Insurers hope to make profit through pooling policies from a large number of individuals. Unless the risk in question is similar for all potential customers, an insurer is exposed to the possibility of adverse selection by attracting only high-risk individuals. To counter this, insurers have traditionally employed underwriting principles, identifying suitable risk factors to subdivide their potential customers into homogeneous risk groups, based on which risk-related premiums can be charged. In reality, however, insurers may not have all the information reflecting individuals' risks due to information asymmetry or restrictions on using certain risk factors by regulators. In either case, conventional wisdom suggests that the absence of risk classification in an insurance market is likely to lead to a vicious circle: increasing premium with the prime aim to recover losses from over-subscription by high risks would lead to more low risks dropping out of the market; and eventually leading to a collapse of the whole insurance system, i.e. an adverse selection spiral. However, this concept is difficult to reconcile with the successful operation of many insurance markets, even in the presence of some restrictions on risk classification by regulators. Theoretical analysis of polices under asymmetric information began in the 1960s and 1970s (Arrow (1963), Pauly (1974), Rothschild & Stiglitz (1976)), by which time the adverse consequences of information asymmetry had already been widely accepted. However, empirical test results of its presence are mixed and varied by markets. Arguably from society's viewpoint, the high risks are those who most need insurance. That is, if the social purpose of insurance is to compensate the population's losses, then insuring high risks contributes more to this purpose than insuring low risks. In this case, restriction on risk classification may be reasonable, otherwise premium for high risks would be too high to be affordable. Thus, the traditional insurers' risk classification practices might be considered as contrary to this social purpose. To highlight this issue, ''loss coverage'' was introduced in Thomas (2008) as the expected population losses compensated by insurance. A higher loss coverage indicates that a higher proportion of the population's expected losses can be compensated by insurance. This might be a good result for the population as a whole. A corollary of this concept is that, from a public policy perspective, adverse selection might not always be a bad thing. The author argued that a moderate degree of adverse selection could be negated by the positive influence of loss coverage. Therefore, when analysing the impact of restricting insurance risk classification, loss coverage might be a better measure than adverse selection. In this thesis, we model the outcome in an insurance market where a pooled premium is charged as a result of an absence of risk-classification. The outcome is characterised by four quantities: equilibrium premium, adverse selection, loss coverage and social welfare. Social welfare is defined as the total expected utility of individuals (including those who buy insurance and those who do not buy insurance) at a given premium. Using a general family of demand functions (of which iso-elastic demand and negative-exponential demand are examples) with a non-decreasing demand elasticity function with respect to premium, we first analyse the case when low and high risk-groups have the same constant demand elasticity. Then we generalise the results to the case where demand elasticities could be different. In general, equilibrium premium and adverse selection increase monotonically with demand elasticity, but loss coverage first increases and then decreases. The results are consistent with the ideas proposed by Thomas (2008, 2009) that loss coverage will be increased if a moderate degree of adverse selection is tolerated. Furthermore, we are able to show that, for iso-elastic demand with equal demand elasticities for high and low risks, social welfare moves in the same direction as loss coverage, i.e. social welfare at pooled premium is higher than at risk-differentiated premiums, when demand elasticity is less than 1. Therefore, we argue that loss coverage may be a better measure than adverse selection to quantify the impact of risk classification scheme being restricted. Moreover, (observable) loss coverage could also be a useful proxy for social welfare, which depends on unobservable utility functions. Therefore, adverse election is not always a bad thing, if demand elasticity is sufficiently low. The research findings should add to the wider public policy debate on these issues and provide necessary research insights for informed decision making by actuaries, regulators, policyholders, insurers, policy-makers, capital providers and other stakeholders

Loss coverage in insurance markets: why adverse selection is not always a bad thing

This paper investigates equilibrium in an insurance market where risk classification is restricted. Insurance demand is characterised by an iso-elastic function with a single elasticity parameter. We characterise the equilibrium by three quantities: equilibrium premium; level of adverse selection; and “loss coverage”, defined as the expected population losses compensated by insurance. We find that equilibrium premium and adverse selection increase monotonically with demand elasticity, but loss coverage first increases and then decreases. We argue that loss coverage represents the efficacy of insurance for the whole population; and therefore, if demand elasticity is sufficiently low, adverse selection is not always a bad thing