Measured by any one of a number of standards, insurance in the United States is a large industry. In 2015, total direct written premiums for the Life and Health and Property and Casualty sectors combined were $1.27 trillion, or approximately seven percent of the Gross Domestic Product (GDP) of the United States. Despite the great benefits that accrue to society through operation of the insurance mechanism, it is evident that such a complicated and intricate device does not come into existence by itself. Someone must estimate the probability of loss, collect the funds necessary to compensate those who suffer loss, make payments for the losses that do occur, and provide for the general administration of the program. These are the functions performed by insurers.
A basic distinction may be made between private and government insurers. To a limited extent historically in this country, and to a considerable extent abroad, governmentally organized and managed insurance organizations have offered insurance to the public. In your paper you should review the private insurance industry and the limited activities of government insurers as providers of voluntary or private insurance.
For this assignment you will write a 3-7 page paper outlining your views on competition in the insurance industry. Your paper must be typed in 12 font, double-spaced, with 1 inch margins. You should use either MLA or APA style for formatting and citations.
Of the following questions, pick a minimum of 3 to guide your research for this paper:
List the types of insurers as classified by legal form of ownership, and briefly describe the distinguishing characteristics of each type.
Distinguish between an insurance agent and an insurance broker. What is the significance of the distinction from the insured’s viewpoint?
What are the characteristics of a health maintenance organization (HMO) that distinguish it from other types of insurers?
Briefly explain the sources of an insurance agent’s authority. How does the authority of a life insurance agent differ from that of a property and liability insurance agent?
Identify the various costs that are common to all insurers and explain the extent to which these costs may differ from one insurer to another.
How do you account for the fact that two insurers may charge significantly different premiums for identical coverage?
Describe the basic function of advisory organizations. In which lines of insurance are such organizations primarily found?
Government insurance programs may compete with those of private insurers, may involve cooperation between government and private insurers, or may be a monopoly. Give an example of a government insurance program in each of these three categories.
Adam Smith wrote, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” To what extent do you believe that this observation holds true with respect to the various cooperative organizations in the insurance field?
Agents frequently emphasize “service” in their advertising. What services should a client legitimately expect from his or her insurance agent?
Some government insurers compete with private insurers. To what extent does a government insurer have an unfair advantage over a commercial one? How can competition of government insurers with private insurers be justified?
Government insurance programs frequently involve a subsidy to certain segments of society. To what extent do you feel that this is preferable to the provision of insurance on a subsidized basis through the mandatory participation pools operated by private insure

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