5. Insurance: The Archetypal Risk Management Institution

Financial Markets (ECON 252) Insurance provides significant risk management to a broad public, and is an essential tool for promoting human welfare. By pooling large numbers of independent or low-correlated risks, insurance providers can minimize overall risk. The risk management is tailored to individual circumstances and reflects centuries of insurance industry experience with real risks and with moral hazard and selection bias issues. Probability theory and statistical tools help to explain how insurance companies use risk pooling to minimize overall risk. Innovation and government regulation have played important roles in the formation and oversight of insurance institutions. 00:00 - Chapter 1. Circumventing Selection Bias in the Equity Premium Puzzle 10:13 - Chapter 2. Politics in the Stock Market and Modern Mutual Funds 19:43 - Chapter 3. The Intuition behind Insurance 34:54 - Chapter 4. Multiline, Monoline, and P&C Insurances 43:52 - Chapter 5. The Advent and Development of the Insurance Industry 56:06 - Chapter 6. Government and NAIC Regulation of Insurance 01:05:14 - Chapter 7. Problems with Insurance Companies Today Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses This course was recorded in Spring 2008.

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Uploaded: November 30, 1999 at 12:00 am
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