CAS.GOVTINS Flashcards
5 reasons for government participation in insurance
Filling needs unmet by private insurance
Compulsory (when insurance is compulsory)
Convenience (government may already have necessary structures in place)
Efficiency (agent commissions eliminated, lower premiums for consumer)
Social purposes (private market is motivated by profit, sometimes at the expense of social purposes)
3 levels of government involvement in insurance
- Government as a SOLE provider
- Government in partnership with private insurance
- Government in competition with private insurance
How can government subsidize losses (2)
- general tax revenue
- by charging less than actuarially sound rates
Why may efficiency of government insurance be overstated
Other government departments may already be performing services normally provided by insurer but the cost of these services may not be included in expenses (true expenses understated)
3 criterias used to evaluate government insurance programs
- is it insurance or welfare
- is it necessary or serves social purpose
- is it efficient