The Niche Insurance Policy Behind a Software Company's Big Legal Payout Summary: Did you know that insurance companies will give you money back if you paid them too much? It's paid in the form of insurance dividends. Did you know celebrities and athletes can have their body parts insured, or that Troy Poamalu's hair is apparently insured by Head and Shoulders? Now, we have another insurance product that is all the rage, the judgment preservation policy. This policy aims to minimize the risks associated with financial transactions and litigation by protecting against the possibility that an award won at the trial court could be wiped out or reduced on appeal. Recently Appian was awarded a $2B judgment. By Appian taking out a judgment preservation policy, they are quaranteed at least $500M. The appeals process can be unpredictable, so

The Niche Insurance Policy Behind a Software Company's Big Legal Payout Summary: Did you know that insurance companies will give you money back if you paid them too much? It's paid in the form of insurance dividends. Did you know celebrities and athletes can have their body parts insured, or that Troy Poamalu's hair is apparently insured by Head and Shoulders? Now, we have another insurance product that is all the rage, the judgment preservation policy. This policy aims to minimize the risks associated with financial transactions and litigation by protecting against the possibility that an award won at the trial court could be wiped out or reduced on appeal. Recently Appian was awarded a $2B judgment. By Appian taking out a judgment preservation policy, they are quaranteed at least $500M. The appeals process can be unpredictable, so

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: The Basic Tools Of Finance

Section: Chapter Questions

Problem 5PA

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Similar questions

A9 Describe an example of adverse selection that we may run into in the real world. How does adverse selection impact the policy holders for this specific type of insurance for: High risk participants? Low risk participants? What is one government regulation that has been enacted in the last 20 years that helps either high risk or low risk policy holders in the United States
Insurance buyers have more information about whether they are high-risk or low-risk than the insurance company does. This creates an asymmetric information problem for the insurance company because buyers who are high-risk tend to want to buy more insurance, without letting the insurance company know about their higher risk. How might this problem impact an insurance company? F T O The company will not be impacted. O The insurance buyers, not the company, will be impacted. As high risk buyers submit claims, they will use up the company's funds for that year, and since the company did not adjust for these high risk claims, once that money is used up, remaining claimants won't receive any coverage. The company will be faced with heavy losses. The insurance company may decide not to sell insurance in this market at all or otherwise choose not to sell insurance to those they can identify as high risk. 106 # C 4 $ JUL 21 tv♫♬ % MacBook Pro Search or type URL + W D P N Ⓒ
Why is there asymmetric information in the labor market? What signals can an employer look for that might indicate file traits they are seeking in a new employee?
What is the problem of moral hazard?
How can deductibles, copayments, and coinsurance reduce moral hazard?
4. You own a house worth $700,000 that is located on a river. If the river floodsmoderately, the house will be completely destroyed. Moderate flooding happensabout once every 40 years. If you build a seawall, the river would have to floodheavily to destroy your house, and such heavy flooding happens only about onceevery 150 years.a. What would be the annual premium for a flood insurance policy that offers fullinsurance? Make sure to show your work.b. For a policy that pays only 75% of the home value, what are your expected costswith and without a seawall? Make sure to show your workc. Do the different policies provide an incentive to be safer (i.e., to build theseawall)?
Why is it important to carry auto insurance? O To protect against the risk of a natural disaster O To protect against the risk of serious illness O To protect against the risk of a car accident O To protect against the risk of income loss
12. True or False? Medicaid is a U.S. federal- and state- government-sponsored insurance program that provides insurance to people under age 65 whose incomes fall below a certain threshold (level). O True O False
Which of he following stalements about lhe Time Limil on Certain Defenses provision in an Accident and Heallh policy is CORRECT? A.It specifies the period of time after which an insurance company can deny a claim on he basis of the claim having pre-existed before the effective dale of coverage. B.It specifies the period of lime during which the insured must submit Proof of Loss. C.It prohibits legal actions against the insurance company after a specified period of time. D.It prevents an insurance company from maki any changes to a policy after il is issued.
For each of the following kinds of insurance, give anexample of behavior that reflects moral hazard andanother example of behavior that reflects adverseselection.a. health insuranceb. car insurancec. life insurance
A consumer’s demand for a medical service is as follows: Q = 100 – P, where P is theout-of-pocket price she actually faces. Assume this medical service has a market price of $70.This consumer is considering four different insurance options: no insurance, full insurance, a 50% coinsurance plan, and a copayment plan with a $25 co-pay Calculate the deadweight loss under each insurance scheme and show iton each graph. What do you observe?
9. Comparing policies Shopping for Life Insurance Suppose Kim has determined that a $100,000 universal life insurance policy would best suit her needs. Tina Trustworthy, a local life insurance agent, quoted her a monthly rate of $300. She remembers learning from her personal finance course that premiums for similar policies, so she plans to Before doing anything else, she decides to consult her Uncle Jim, an attorney, about the features of his life insurance policy. He tells Kim that he has a 10-year $200,000 term life policy. Tina Trustworthy is the second life insurance agent Kim consulted. The first agent she saw was David Dishonestman. Kim began to suspect that rather than trying to serve her best interests, David Dishonestman was primarily interested in earning as high a commission as possible. Which of the following behaviors would have raised Kim's suspicions? Check all that apply. O David Dishonestman described a policy with a high rate of interest, but it had to be purchased…