ECON 252 (2008) - Lecture 5 - Insurance: The Archetypal Risk Management Institution

Lecture 5 - Insurance: The Archetypal Risk Management Institution

Overview

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.

Resources

Assignment

Fabozzi et al. Foundations of Financial Markets and Institutions, chapter 6

Course Media

Transcript

html

Audio

mp3

Low Bandwidth Video

mov [100MB]

High Bandwidth Video

mov [500MB]