Chapter 13

Chapter 13 - Chapter 13-Nonbank Finance Insurance Life...

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- Nonbank Finance Insurance •Life insurance –Permanent (whole, universal, and variable) –Term •Property and Casualty –Hold more liquid assets than life insurance companies –Reinsurance •Competitive threat from the banking industry •Credit insurance –Credit default swaps •AIG case. –Monoline insurance Insurance Management •To lower moral hazard and adverse selection –Screening –Risk-based premiums –Restrictive provisions –Prevention of fraud –Cancellation of insurance –Deductibles –Coinsurance –Limits on the amounts of insurance Pension Funds •Defined-contribution plan •Defined-benefit plan –Fully-funded; underfunded •Private pension plans –Employee Retirement Income Security Act (ERISA) of 1974 •Pension Benefit Guarantee Corporation (PBGC, Penny Benny) •Public pension plans –Social Security •Pay as you go system. •Massive underfunding. •Possible reforms proposed.
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Chapter 13 - Chapter 13-Nonbank Finance Insurance Life...

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