Risk Management and Insurance

Note: Supplemental materials are not guaranteed with Rental or Used book purchases.

ISBN: 9780072339703 | 0072339705
Cover: Hardcover
Copyright: 7/15/2003

Rent

(Recommended)

$12.09

Term

Due

Price

Semester

Aug 2

$12.09

Quarter

Jul 19

$11.48

Short Term

Jun 21

$10.89

*This item is part of an exclusive publisher rental program and requires an additional convenience fee. This fee will be reflected in the shopping cart.
Buy Used

In Stock Usually Ships in 24 Hours.

$161.42

For many years, introductory insurance textbooks presented insurance as a subject based in contracts. Slowly, the course has moved toward a consumer orientation, providing students with a broad, descriptive survey of the insurance field, covering topics such as legal aspects, life and health, and property and liability. Over the past 10 years, textbooks began to promote, and to a limited degree, incorporate a stronger business risk management component while maintaining a consumer orientation. Harrington/Niehaus' Risk Management and Insurance 2e is written to take the next step offering the essential aspects of insurance contracts and the insurance industry while providing a substantially more conceptual analysis and attention to business risk management and public policy issues that exists in current texts.

About the Authors

viii

Preface

Chapter 1 Risk and Its Management

(14)

1.1 Risk

(3)

Different Meanings of Risk

(1)

Risk Is Costly

(1)

Direct versus Indirect Expected Losses

(1)

1.2 Types of Risk Facing Businesses and Individuals

(4)

Business Risk

(1)

Personal Risk

(1)

Comparison of Pure Risk and Its Management with Other Types of Risk

(2)

1.3 Risk Management

(4)

The Risk Management Process

(1)

Risk Management Methods

(3)

1.4 Business Risk Management Organization

(1)

1.5 Summary

(2)

Chapter 2 Objective of Risk Management

(15)

2.1 The Need for a Risk Management Objective

(1)

2.2 Understanding the Cost of Risk

(5)

Components of the Cost of Risk

(2)

Cost Tradeoffs

(1)

Cost of Other Types of Risk

(1)

2.3 Firm Value Maximization and the Cost of Risk

(4)

Determinants of Value

(1)

Maximizing Value by Minimizing the Cost of Risk

(1)

Measuring the Cost of Risk

(1)

Subsidiary Goals

(1)

Objectives for Nonprofit Firms

(2)

2.4 Individual Risk Management and the Cost of Risk

(1)

2.5 Risk Management and Societal Welfare

(2)

2.6 Summary

(3)

Chapter 3 Risk Identification and Measurement

(24)

3.1 Risk Identification

(4)

Identifying Business Risk Exposures

(1)

Identifying Individual Exposures

(1)

3.2 Basic Concepts from Probability and Statistics

(14)

Random Variables and Probability Distributions

(4)

Characteristics of Probability Distributions

(10)

3.3 Evaluating the Frequency and Severity of Losses

(2)

Frequency

(1)

Severity

(1)

Expected Loss and Standard Deviation

(1)

3.4 Summary

(4)

Chapter 4 Pooling Arrangements and Diversification of Risk

(21)

4.1 Risk Reduction through Pooling Independent Losses

(6)

Two Person Pooling Arrangement

(3)

Pooling Arrangement with Many People or Businesses

(3)

4.2 Pooling Arrangements with Correlated Losses

(3)

4.3 Insurers as Managers of Risk Pooling Arrangements

(2)

Types of Contracting Costs

(1)

Ex Ante Premium Payments versus Ex Post Assessments

(1)

4.4 Other Examples of Diversification: Stock Markets

(2)

4.5 Summary

(3)

Appendix 4A More on Risk Measurement and Risk Reduction

(5)

Chapter 5 Insurer Ownership, Financial, and Operational Structure

(22)

5.1 Insurer Capital

(1)

5.2 Ownership and Sources of Capital

(6)

Mutual Insurers

(1)

Stock Insurers

(1)

Lloyd's of London

(3)

Convergence of Financial Service Providers

(1)

5.3 Factors Affecting Insurer Capital Decisions

(7)

Benefits of Increasing Capital

(2)

Costs of Increasing Capital

(3)

Summary and Relationship to Business Risk Management

(1)

Amount of Capital Held by Insurers

(2)

5.4 Insurer Operations, Reinsurance, and Insolvency Risk

(6)

Diversification of Underwriting Risk

(1)

Reinsurance

(3)

Asset Choice and Investment Risk

(3)

5.5 Summary

(2)

Chapter 6 Insurance Regulation

(18)

6.1 Scope and Operation of State Insurance Regulation

(3)

Regulated Activities

(2)

National Association of Insurance Commissioners

100

(1)

6.2 History and Efficacy of State Regulation

100

(6)

History of State Regulation

101

(3)

State versus Federal Regulation

104

(2)

6.3 Objectives of Regulation: The Public Interest View

106

(4)

Serving the Public Interest by Mitigating Market Imperfections

106

(1)

An Example of the Public Interest View: Dealing with Costly and Imperfect Information

107

(3)

6.4 Regulation and Political Pressure

110

(2)

Regulators as Agents of the Public

110

(1)

The Economic Theory of Regulation

111

(1)

6.5 Summary

112

(3)

Chapter 7 Insolvencies, Solvency Ratings, and Solvency Regulation

115

(19)

7.1 Insurer Insolvencies

115

(4)

Frequency and Severity of Insurance Company Insolvencies

116

(1)

Causes of Insolvencies

116

(3)

7.2 Solvency Ratings

119

(3)

7.3 Overview of Solvency Regulation

122

(8)

Objectives of Solvency Regulation

122

(1)

Regulatory Monitoring of Insurer Insolvency Risk

123

(2)

Restrictions on Insurers' Capital and Assets

125

(1)

State Guaranty Systems

126

(4)

7.4 Summary

130

(2)

Appendix 7A Illustration of Risk-Based Capital

132

(2)

Chapter 8 Insurance Pricing

134

(28)

8.1 Insurance Costs and Fair Premiums

134

(1)

8.2 Expected Claim Costs

135

(7)

Homogeneous Buyers

135

(1)

Heterogeneous Buyers

136

(1)

Competition, Risk Classification, and Societal Welfare

137

(4)

Risk Classification Practices

141

(1)

8.3 Investment Income and the Timing of Claim Payments

142

(3)

All Claims Paid at the End of One Year

143

(1)

All Claims Paid at the End of Two Years

144

(1)

8.4 Administrative Costs

145

(1)

8.5 Profit Loading

146

(2)

8.6 Capital Shocks and Underwriting Cycles

148

(4)

Fair Premiums Are Forward Looking

149

(1)

Large Losses and Capital Shocks

149

(2)

The Underwriting Cycle

151

(1)

8.7 Price Regulation

152

(5)

Regulation of Rate Changes

153

(1)

Regulation of Rating Factors

154

(3)

Ensuring Availability When Regulation Depresses Rates

157

(1)

8.8 Summary

157

(5)

Chapter 9 Risk Aversion and Risk Management by Individuals and Corporations

162

(17)

9.1 Risk Aversion and Demand for Insurance by Individuals

162

(6)

The Effects of Insurance on Wealth

162

(2)

Risk Aversion

164

(1)

Other Factors Affecting an Individual's Demand for Insurance

165

(3)

9.2 Business Risk Management and Demand for Insurance

168

(5)

Shareholder Diversification

168

(2)

Closely Held Businesses

170

(1)

Why Purchase Insurance When Shareholders Are Diversified?

171

(2)

9.3 Summary

173

(3)

Appendix 9A Expected Utility

176

(3)

Chapter 10 Insurability of Risk, Contractual Provisions, and Legal Doctrines

179

(22)

10.1 Factors that Limit the Insurability of Risk

179

(9)

Premium Loadings

180

(3)

Moral Hazard

183

(3)

Adverse Selection

186

(2)

10.2 Contractual Provisions that Limit Coverage

188

(6)

Deductibles

188

(2)

Coinsurance

190

(1)

Policy Limits

190

(1)

Coordination of Benefits (Pro Rata and Excess Coverage Clauses)

191

(1)

Exclusions

191

(1)

Indemnity versus Valued Contracts

191

(1)

Insurance-to-Value (Coinsurance) in Property Insurance

192

(2)

10.3 Legal Doctrines

194

(3)

Reducing Contracting Costs through Fundamental Legal Doctrines

194

(2)

Resolving Coverage Disputes

196

(1)

10.4 Summary

197

(4)

Chapter 11 Loss Control

201

(14)

11.1 Types of Loss Control

201

(3)

Loss Prevention

202

(1)

Loss Reduction

202

(1)

Diversification and Expected Indirect Losses

203

(1)

Effects of Insurance on Loss Control

204

(1)

11.2 Optimal Loss Control When Costs and Benefits Are Known

204

(3)

A Simple Example of Safety Expenditures

204

(2)

Incorporating the Timing of Benefits and Costs

206

(1)

11.3 Examples of Identification of Benefits and Costs

207

(2)

Installation of Automatic Sprinkler System

207

(1)

Installation of Safety Guards

207

(1)

Child-Resistant Packaging of Nonprescription Drugs

208

(1)

Qualitative versus Quantitative Decision Making

209

(1)

11.4 Government Safety Programs

209

(1)

11.5 Valuing Loss of Life and Cost-Benefit

Analysis of Safety Regulation

210

(3)

11.6 Summary

213

(2)

Chapter 12 Legal Liability for Injuries

215

(27)

12.1 Some Background on the Law

215

(1)

12.2 Overview of Tort Liability Rules and Procedures

216

(5)

Basic Tort Liability Rules

217

(1)

Damages

218

(1)

Joint and Several Liability

219

(2)

12.3 Liability from Negligence

221

(2)

Elements of Negligence

221

(1)

Defenses to Negligence

222

(1)

12.4 Economic Objectives of the Tort Liability System

223

(5)

Optimal Safety (Optimal Loss Control)

224

(2)

Optimal Compensation to Victims

226

(2)

12.5 Limited Wealth and Limited Liability

228

(2)

Situations in Which Injurers Can Escape Liability

228

(1)

Compulsory Liability Insurance and the Judgment Proof Problem

229

(1)

12.6 Tort Liability and Safety Regulation

230

(1)

12.7 Proposals for Tort Reform

231

(2)

Modifying Incentives to Bring Suits

231

(1)

Reducing Damages

232

(1)

Limiting the Application of Joint and Several Liability

233

(1)

12.8 Summary

233

(3)

Appendix 12A Why Have a Tort System? A Closer Look

236

(6)

Chapter 13 Automobile Insurance

242

(34)

13.1 Overview of Auto Loss Exposures and Insurance

242

(8)

Liability Coverage

244

(2)

Medical Payments Coverage

246

(1)

Uninsured and Underinsured Motorists Coverage

246

(2)

Damage and Other Losses to Autos

248

(2)

13.2 Auto Insurance Pricing and Underwriting

250

(11)

Rating Factors

251

(4)

Underwriting

255

(3)

Residual Markets

258

(3)

13.3 Should Auto Insurance Be Compulsory?

261

(4)

Economic Rationale

261

(1)

Criticisms and Limitations of Compulsory Insurance

262

(2)

Alternatives to Compulsory Insurance

264

(1)

13.4 Should Tort Liability Be Limited with No-fault Laws?

265

(7)

No-fault Compared to Tort Liability

265

(1)

PIP Benefits and Limitations on Tort Liability with Compulsory No-fault

266

(1)

The Rationales for and against No-fault

267

(2)

How Does No fault Affect Premiums?

269

(2)

Choice No-fault

271

(1)

Other Proposals to Limit Tort Liability

272

(1)

13.5 Summary

272

(4)

Chapter 14 Homeowners Insurance

276

(21)

14.1 Homeowners Insurance

276

(9)

Types of Policies

276

(1)

Description of Major Coverages

277

(4)

Property Loss Settlement

281

(3)

Pricing Homeowners Policies

284

(1)

14.2 Personal Umbrella Policies

285

(1)

14.3 Coverage of High Risk/Catastrophic Perils

286

(3)

Earthquake Coverage

286

(1)

National Flood Insurance

286

(1)

Residual Market Plans

287

(2)

14.4 Impact of Catastrophes on Property Insurance

289

(5)

Florida and Hurricane Andrew

290

(2)

California and the Northridge Earthquake

292

(1)

Rationale for Government-sponsored Reinsurance Arrangements

292

(1)

New Capital Market Instruments for Financing Catastrophe Losses

293

(1)

14.5 Summary

294

(3)

Chapter 15 Life Insurance and Annuities

297

(37)

15.1 Life Insurance Product Overview

297

(3)

15.2 Traditional Products: Term, Endowment, and Whole Life

300

(5)

Term Insurance

300

(1)

Endowment Insurance

300

(1)

Whole Life Insurance

301

(4)

15.3 Product Innovation: Universal and Variable Life

305

(5)

Universal Life

305

(4)

Variable Life

309

(1)

15.4 Tax Benefits from Life Insurance Policies

310

(1)

15.5 Annuity Contracts

311

(3)

Uses of Annuities

312

(1)

Specific Savings Features

312

(2)

15.6 Life Insurance Pricing

314

(9)

One-year Term Insurance

314

(3)

Two-year Term Insurance

317

(2)

Comparison

319

(1)

Pricing Immediate Annuities

320

(1)

Pricing Whole Life Insurance

321

(2)

15.7 How Much Life Insurance Coverage Should Be Purchased?

323

(2)

15.8 Life Insurance Cost Comparisons

325

(3)

Background

325

(1)

Term Insurance

325

(1)

Whole Life Insurance

326

(1)

Universal Life Insurance and Other Investment Sensitive Products

327

(1)

15.9 Summary

328

(3)

Appendix 15A Retrospective Analysis of Cash Value Accumulation

331

(3)

Chapter 16 Employee Benefits: Overview and Group Medical Coverage

334

(30)

16.1 Major Types of Employee Benefits

334

(3)

Who Pays the Cost of Benefits?

336

(1)

Flexibility in Choice of Benefits

336

(1)

16.2 Why Firms Provide Employee Benefits

337

(2)

Income Tax Advantages of Employee Benefits

337

(1)

Cost Savings with Group Insurance

338

(1)

Productivity and Employee Benefits

339

(1)

Regulatory Restrictions on Employee Benefits

339

(1)

16.3 Overview of Group Medical Expense Coverage

339

(10)

Traditional Fee-for-Service Insurance Arrangements

339

(3)

Fee-for-Service and Utilization of Health Care Services

342

(3)

Reducing Moral Hazard under Fee for-Service Arrangements

345

(1)

Health Maintenance Organizations

346

(3)

16.4 Group Medical Plan Provisions and Pricing Issues

349

(3)

Dependent Coverage

349

(1)

Cross-Subsidies in Group Medical Coverage

349

(1)

Mandated Benefits

350

(1)

Portability of Coverage

350

(1)

Renewability of Small Group Health Insurance

351

(1)

16.5 Health Care Cost Inflation and the Uninsured Problem

352

(4)

Why Does Health Care Cost So Much?

354

(1)

The Uninsured: Who, Why, and Effects on Others

355

(1)

16.6 Health Care Reform

356

(4)

Trade-offs Involving Cost, Quality, and the Scope of Insurance

356

(2)

Possible Approaches to Reform

358

(2)

16.7 Summary

360

(4)

Chapter 17 Retirement Plans

364

(24)

17.1 Overview of Retirement Plans

364

(4)

Defined Benefit Plans

365

(1)

Defined Contribution Plans

366

(1)

Cash Balance Plans

367

(1)

17.2 Tax Advantages of Retirement Plans

368

(4)

Saving Outside of a Qualified Retirement Plan

368

(1)

Effect of Deferral of Tax on Investment Earnings

369

(1)

Effect of Deferring Tax on Both Investment Earnings and Contributions

369

(2)

Lower Tax Rates during Retirement

371

(1)

Tax Advantages of Defined Benefit Plans

372

(1)

17.3 Incentive Effects of Employer-sponsored Pension Plans

372

(4)

Increasing Productivity

373

(2)

Inducing Retirement

375

(1)

17.4 Types of Defined Contribution Plans

376

(2)

Money Purchase and Profit Sharing Plans

376

(1)

401(k) Plans

376

(1)

Employee Stock Ownership Plans

377

(1)

Simplified Employee Pensions (SEP) and SIMPLE Plans

378

(1)

Growth in Defined Contribution Plans

378

(1)

17.5 Self-employed (Keogh) and Individual Retirement Accounts (IRAs)

378

(2)

Keogh Plans

378

(1)

Individual Retirement Plans (IRAs)

379

(1)

17.6 Retirement Plan Provisions and Regulations

380

(4)

Nondiscrimination and Vesting Rules

380

(1)

Funding Requirements

380

(1)

Pension Insurance

381

(2)

Excess Assets in Defined Benefit Plans

383

(1)

17.7 Summary

384

(4)

Chapter 18 Workers' Compensation and Employee Injuries

388

(26)

18.1 Overview of Workers' Compensation Laws

388

(3)

18.2 Workers' Compensation Benefits

391

(4)

Medical Benefits

391

(1)

Disability Benefits

392

(2)

Survivor Benefits

394

(1)

18.3 Why Have Workers' Compensation?

395

(4)

Who Pays for Injury Costs?

395

(1)

Benefits and Costs of Different Arrangements

396

(3)

18.4 Workers' Compensation Insurance and Self-insurance

399

(5)

Description of Insurance Coverage

399

(1)

Insurance Pricing, Residual Markets, and State Funds

400

(3)

Self-insurance and Large Deductible Policies

403

(1)

Second Injury Funds

404

(1)

18.5 Problems and Reforms in Workers' Compensation

404

(4)

18.6 Government Safety Regulation and Other Sources of Liability

408

(1)

The Occupational Safety and Health Act

408

(1)

Americans with Disabilities Act

408

(1)

Other Sources of Liability

409

(1)

18.7 Summary

409

(5)

Chapter 19 Social Security

414

(27)

19.1 Overview of Social Security 414

19.2 Old-Age, Survivors, and Disability Insurance (OASDI) Benefits

415

(6)

Eligibility

415

(1)

Types of OASDI Benefits

415

(3)

OASDI Benefit Amounts

418

(3)

19.3 OASDI Financing

421

(4)

OASDI and HI Payroll Tax

421

(1)

Pay-as-you-go Financing

422

(1)

Projected OASDI Deficits

423

(2)

19.4 Understanding Pay-as-you-go Systems

425

(4)

Economic and Demographic Factors Affecting Benefits and Taxes

425

(1)

Historical and Projected Implicit Rates of Return with Pay-as-you-go Financing

425

(4)

19.5 Why Have Social Security?

429

(3)

Self-financing COLAs

430

(1)

Compulsion and Social Adequacy

431

(1)

Effect on Savings, Capital Formation, and Economic Growth

432

(1)

19.6 Proposed Changes and Alternatives to Social Security

432

(2)

Changes That Would Maintain the Basic Structure of OASDI

433

(1)

Changes That Would Modify the Basic Structure of OASDI

433

(1)

19.7 Medicare

434

(2)

Medicare Benefits

434

(1)

Medicare Financing

435

(1)

Private Coverage to Supplement Medicare

436

(1)

19.8 Summary

436

(3)

Appendix 19A Implicit Rate of Return on Payroll Taxes with Pay-as-you go Financing

439

(2)

Chapter 20 Risk Management and Shareholder Wealth

441

(22)

20.1 Principles of Business Valuation

441

(4)

Valuation Formula

441

(2)

Components of the Opportunity Cost of Capital

443

(1)

Compensation for Risk

443

(2)

20.2 Risk Management and the Opportunity Cost of Capital

445

(1)

20.3 Risk Management and Expected Cash Flows

446

(10)

Insurance Premium Loadings

448

(2)

Services Provided by Insurers

450

(1)

Insurance and the Likelihood of Having to Raise Costly External Funds

450

(2)

Insurance and Financial Distress

452

(4)

20.4 Summary

456

(2)

Appendix 20A Issuing Securities versus Purchasing Insurance

458

(2)

Appendix 20B How Insurance Can Mitigate the Underinvestment Problem

460

(3)

Chapter 21 Tax, Regulatory, and Accounting Factors Affecting Corporate Risk Management

463

(21)

21.1 Tax Benefits Defined

463

(2)

21.2 Progressivity in Corporate Income Tax Rates

465

(3)

Overview

465

(1)

Numerical Example and Additional Insights

466

(1)

Progressivity of US Corporate Income Tax Rates

467

(1)

21.3 Tax Treatment of Insurers versus Noninsurance Companies

468

(3)

Overview

468

(1)

Example and Additional Insights

468

(2)

Tax Benefit with Overstated Loss Reserves

470

(1)

21.4 Insuring Depreciated Property

471

(3)

Overview

471

(1)

Example and Additional Insights

471

(3)

21.5 Insurance and Interest Tax Shields on Debt

474

(1)

21.6 Insurance Premiums and Excise Taxes

475

(1)

21.7 Regulatory Effects on Loss Financing

475

(2)

Compulsory Insurance

476

(1)

Restriction on the Choice of Insurers

476

(1)

21.8 Financial Accounting Influences on Loss Financing

477

(3)

Financial Accounting for Insurance Premiums and Uninsured Losses

478

(1)

Impact of Financial Accounting Numbers on Cash Flow

479

(1)

21.9 Summary

480

(3)

Appendix 21A Tax Benefits when Insurers Overstate Loss Reserves

483

(1)

Chapter 22 Risk Retention/Reduction Decisions

484

(16)

22.1 Firm Characteristics Affecting Risk Retention (Reduction) Decisions

484

(5)

Benefits of Increased Retention

485

(2)

Costs of Increased Retention

487

(2)

A Basic Guideline for Optimal Retention

489

(1)

22.2 Evidence on Business Risk Reduction Decisions

489

(3)

22.3 Aggregated or Disaggregated Risk Management?

492

(6)

Linking Theory with Practice

492

(1)

Advantages and Disadvantages of Disaggregation

493

(5)

22.4 Summary

498

(2)

Chapter 23 Commercial Insurance Contracts

500

(26)

23.1 Overview of Contracts and Markets

500

(5)

Major Types of Commercial Property-Casualty Insurance

501

(3)

Designing and Negotiating Commercial Insurance Programs

504

(1)

23.2 Deductibles and Self-insured Retentions

505

(2)

23.3 Policy Limits and Primary/Excess/Umbrella Policies

507

(4)

23.4 Property Insurance

511

(3)

Covered Losses

512

(1)

Covered Causes of Loss

513

(1)

23.5 Commercial General Liability Insurance

514

(8)

CGL Covered Losses

514

(1)

CGL Exclusions

515

(1)

Occurrence Coverage

516

(3)

Claims-Made Coverage

519

(3)

23.6 Pricing and Underwriting: Commercial versus Personal Coverage

522

(1)

23.7 Summary

523

(3)

Chapter 24 Hedging with Derivative Contracts

526

(24)

24.1 Introduction to Derivatives and Hedging

526

(7)

Exposure Diagrams Revisited

527

(1)

Hedging with Call Option Contracts

528

(3)

Hedging with Put Options

531

(1)

Cash Settlement versus Physical Delivery

531

(1)

Basis Risk

532

(1)

24.2 Option Pricing

533

(3)

Influence of Underlying Asset, Contract, and Market Characteristics

534

(2)

24.3 Hedging with Forward/Futures Contracts

536

(3)

Illustration

536

(2)

Forward Prices

538

(1)

24.4 Other Derivative Contracts

539

(2)

Constructing Other Derivatives

539

(1)

Swap Contracts

540

(1)

24.5 Comparison of Derivative and Insurance Contracts

541

(3)

Market Prices versus Specific Losses

542

(1)

Basis Risk and Extent of Risk Reduction

542

(1)

Contracting Costs

542

(1)

Liquidity

543

(1)

Summary

544

(1)

24.6 Markets for Derivatives

544

(3)

Over-the-counter versus Exchange-traded Derivatives

544

(2)

Common Risks That Are Hedged with Derivatives

546

(1)

24.7 Summary

547

(3)

Chapter 25 Alternative Risk Transfer

550

(20)

25.1 Description of Alternative Risk Transfer (ART)

550

(1)

25.2 Loss Sensitive Contracts

551

(4)

Experience-rated Policies

551

(1)

Large Deductible Policies and Retrospectively Rated Policies

551

(2)

Related Loss Sensitive Plans

553

(1)

Loss Portfolio Transfers

554

(1)

25.3 Finite Risk Contracts

555

(2)

25.4 Captive Insurers

557

(5)

Motivations for Forming Captive Insurers

559

(1)

The Tax Treatment of Captive Transactions

560

(2)

Risk Retention Groups

562

(1)

25.5 Multiline/Multitrigger Insurance Policies

562

(1)

25.6 Contingent Financing Arrangements

563

(2)

Contingent Debt

563

(1)

Contingent Equity

564

(1)

Advantages and Disadvantages

564

(1)

Lines of Credit

564

(1)

25.7 Structured Debt Instruments

565

(1)

Price or Index-Linked Debt

566

(1)

Catastrophe Bonds

566

(1)

25.8 Trends in Loss Financing

566

(1)

25.9 Summary

567

(3)

Chapter 26 Analysis Tools Used in Corporate Risk Management

570

(21)

26.1 Risk Management Tools

570

(1)

26.2 Calculating Frequency and Severity of Losses from Historical Data

571

(4)

26.3 Using Entire Probability Distributions

575

(7)

Approximating Loss Distributions with the Normal Distribution

575

(1)

Computer Simulation of Loss Distributions

576

(6)

26.4 Correlation Analysis

582

(3)

26.5 Use of Discounted Cash Flow Analysis

585

(3)

The Net Present Value Criterion

585

(1)

Calculating Incremental Expected Cash Flows

585

(1)

Example: Forming a Captive Insurer

586

(2)

The Appropriate Cost of Capital

588

(1)

26.6 Summary

588

(3)

Chapter 27 Enterprise Risk Management: A Case Study

591

(14)

27.1 Enterprise Risk Management

591

(1)

27.2 Enterprise Risk Management at United Grain Growers

592

(11)

Background on UGG

592

(3)

UGG's Analysis

595

(5)

Choices Faced by UGG's Managers

600

(3)

27.3 Summary

603

(2)

Chapter 28 Corporate Liability to Customers, Third Parties, and Shareholders

605

(20)

28.1 Products Liability

605

(8)

Legal Background

605

(3)

Insurance Coverage

608

(1)

Issues

609

(4)

28.2 Environmental Liability

613

(5)

Legal Background

613

(2)

Insurance Coverage

615

(2)

Issues

617

(1)

28.3 Directors and Officers' Liability

618

(4)

Legal Background

618

(2)

Indemnification and Insurance Coverage

620

(1)

Issues

621

(1)

28.4 Summary

622

(3)

Chapter 29 Issues in Liability Risk and Its Management

625

(21)

29.1 Risk Shifting through Limited Liability

625

(7)

Limited Liability as Insurance against Loss

626

(2)

The Moral Hazard Problem

628

(1)

Why Have Limited Liability?

629

(2)

Exceptions to Limited Liability

631

(1)

29.2 Liability for Actions of Employees and Other Parties

632

(2)

Vicarious Liability Doctrine

632

(1)

Liability of Businesses for Actions of Independent Contractors

632

(2)

29.3 Hold Harmless and Indemnity Agreements

634

(3)

Effect on the Cost of Risk

634

(2)

The Role of Insurance

636

(1)

Summary of Incentive Effects

637

(1)

29.4 Claims Management and Administration

637

(5)

General Claims Strategy

637

(3)

Monitoring Performance of Insurers and Outside Contractors

640

(2)

Claim Cost Allocation

642

(1)

29.5 Summary

642

(4)

Index

646

Please wait while the item is added to your bag...

FREE SHIPPING

Amazon no longer offers textbook rentals. We do!

Risk Management and Insurance

Summary

Author Biography

Table of Contents

Supplemental Materials