Quotulatiousness

September 2, 2011

US flood insurance is “a veritable bucket of fail”

Filed under: Economics, Government, Politics, USA — Tags: , , , , , — Nicholas @ 12:12

Felix Salmon on the state of US flood insurance:

Ben Berkowitz has a big report on the the National Flood Insurance Program — something which is a veritable bucket of fail. In a nutshell, it undercuts private insurers and therefore is the only game in town; it insures only a small minority of homeowners; and it loses gobs of money. In September 2005, the NFIP was $1.5 billion in hock to the federal government; that number has now ballooned to $21 billion, and is certain to rise further.

There’s a simple answer to all these problems: let the NFIP raise its rates. And I don’t understand why it’s not being allowed to do so. If the rates rose, then that might allow private insurers into the flood-insurance game, giving consumers a choice and helping to get the word out about how insuring your home against flood damage is a really good idea. The NFIP could become profitable, and thereby start paying back all the money it owes. And while homeowners are quite price sensitive when it comes to flood insurance, the fact is that so few homeowners take out flood insurance right now that the number would be unlikely to fall dramatically if rates went up to a reasonable level.

July 13, 2011

Expanding government-provided flood insurance?

Filed under: Economics, Environment, Government, USA — Tags: , , , , , — Nicholas @ 12:42

It has always amazed me that the US government is the primary insurer for flood damage, but the idea of putting the few remaining private insurace companies out of business is insane:

The House of Representatives is scheduled this week, as early as today, to consider an extension and “reform” of the National Flood Insurance Program (NFIP), administered by FEMA. Since Hurricane Katrina in 2005, the NFIP has been about $18 billion in the hole. And this is from a program that only collects around $2 billion a year in premiums, which barely covers losses and expenses in a normal year. So make no mistake, the NFIP is still on course to cost the taxpayer billions more in the future.

Even before Katrina, the Congressional Budget Office estimated that the NFIP was receiving a subsidy of close to a billion dollars a year. Under CBO’s optimistic projections, the House’s reform bill would increase NFIP revenues by about $4 billion over the next ten years, making only a small dent in the program’s current deficit.

If private insurers aren’t willing to offer insurance to people and businesses located on flood plains, isn’t that a strong indication that building a house or a plant on that location is a bad idea? Why should people who chose not to locate in risky locations be forced to subsidize the risk-taking of those who do?

May 20, 2011

Salesmen get rewarded for whoring their wares

Filed under: Europe, Germany, Randomness — Tags: , , — Nicholas @ 09:09

At least, according to this story, the best salesmen at Munich Re were rewarded with whores:

However, this being a German-run orgy, it was not an unseemly free-for-all, but an efficient affair in which the prostitutes “had worn colour-coded arm-bands designating their availability, and the women had their arms stamped after each service rendered”.

Handelsblatt‘s informant told the paper: “After each such encounter the women were stamped on the lower arm in order to keep track of how often each woman was frequented.”

He elaborated: “The women wore red and yellow wrist bands. One lot were hostesses, the others would fulfill your every wish. There were also women with white wrist bands. They were reserved for board members and the very best sales reps.”

This was back in 2007, according to Handelsblatt, a German business publication. I’ve worked at companies where the sales force seemed to be extravagantly over-rewarded with various goodies, but this seems to be a few steps further.

January 10, 2011

Fighting pirates, privately

Filed under: Africa, Economics, Military — Tags: , , , — Nicholas @ 09:42

Strategy Page reports on a new initiative to combat the problem of piracy off the coast of Somalia:

A major British insurer (Jardine Lloyd Thompson) is organizing a private armed escort service for ships operating off Somalia. Called the Convoy Escort Programme (CEP), the 18 small patrol boats will offer armed escort through the Gulf of Aden, and reduce overall security and insurance costs for ships using the service. It’s all about money, as the insurance companies don’t like the spiraling ransom costs, and especially the unpredictability of the pirates. While the insurance companies can pass the costs onto those who buy their insurance, the pirates could rapidly increase the number of ships their steal, and force the insurance companies to incur losses, not to mention the risk of more ships foregoing insurance and using increased shipboard security and armed guards.

The CEP is not a done deal yet. A country has to sign on to allow the patrol boats to fly their flag (and thus provide a national legal system to operate under). The patrol boats will carry heavy machine-guns (12.7mm/.50 cal), armed crews (all former military) and small boats to check suspected pirates. CEP will coordinate with the anti-piracy patrol, and let the larger warships spend more time pursuing the pirates that are now operating much farther from the Somali coast.

This may not be the answer, but it shows that creativity isn’t dead in the insurance industry.

October 5, 2010

I thought this only happened in the bad old days

Filed under: Government, Liberty, Politics, USA — Tags: , , — Nicholas @ 07:49

One of the arguments that used to appear regularly whenever anyone proposed privatizing public services is that “in the bad old days”, when fire departments were run by insurance firms, they’d only put out fires that endangered paying customers. Apparently that sort of thing still happens today:

Imagine your home catches fire but the local fire department won’t respond, then watches it burn. That’s exactly what happened to a local family tonight.

A local neighborhood is furious after firefighters watched as an Obion County, Tennessee, home burned to the ground.

The homeowner, Gene Cranick, said he offered to pay whatever it would take for firefighters to put out the flames, but was told it was too late. They wouldn’t do anything to stop his house from burning.

Terrible, isn’t it? A strong refutation to that whole crazy libertarian notion of privatizing essential services. So which greedy corporation runs the fire service?

Each year, Obion County residents must pay $75 if they want fire protection from the city of South Fulton. But the Cranicks did not pay.

The mayor said if homeowners don’t pay, they’re out of luck.

Interesting.

H/T to BoingBoing, where many of the comments seem to be from folks who didn’t read that it wasn’t a private fire service.

October 3, 2010

Personal responsibility is key

Filed under: Bureaucracy, Europe, Liberty, USA — Tags: , , , , — Nicholas @ 11:41

A post at The Economist looks at the ongoing debate on liberal/libertarian joint concerns:

My colleague noted the other day the discussion Matthew Yglesias has been having with his readers over whether liberals and libertarians can agree on some regulations they both hate. So, here’s a regulation I hate: you’re not allowed to swim across the lake anymore in Massachusetts state parks. You have to stay inside the dinky little waist-deep swimming areas, with their bobbing lines of white buoys. There you are, under a deep blue New England summer sky, the lake laid out like a mirror in front of you and the rocks on the far shore gleaming under a bristling comb of red pine; you plunge in, strike out across the water, and tweet! A parks official blows his whistle and shouts after you. “Sir! Sir! Get back inside the swimming area!” What is this, summer camp? Henry David Thoreau never had to put up with this. It offends the dignity of man and nature. You want to shout, with Andy Samberg: “I’m an adult!

I would gladly join any movement that promised to do away with this sort of nonsense. For example, Philip K. Howard’s organisation “Common Good” works on precisely this agenda. Common Good’s very bugaboo is useless, wasteful legal interference in schools, health care, recreation, and so on. But what you quickly note with many of these issues is that they’re driven by legal liability concerns. You have a snowblader in Colorado suing a resort because she crashed into someone. You have states declining to put up road-hazard signs because the signs prove they knew the hazard was there, which could render them liable for damages. You have the war on children’s playgrounds. The Massachusetts swimming ban, too, is driven by liability concerns. The park officials in Massachusetts aren’t really trying to minimise the risk that you might drown. They’re trying to minimise the risk that you might sue. The problem here, as Mr Howard says, isn’t simply over-regulation as such. It’s a culture of litigiousness and a refusal to accept personal responsibility. When some of the public behave like children, we all get a nanny state.

As Robert Heinlein put it, “The whole principle is wrong; it’s like demanding that grown men live on skimmed milk because the baby can’t eat steak.”

August 25, 2010

Bans on texting while driving have not measurably improved highway safety

Filed under: Bureaucracy, Law, Media, Technology — Tags: , , , , — Nicholas @ 07:34

This report should come as no real surprise to anyone who’s been paying attention:

The two biggest highway-safety issues right now, as far as Washington is concerned, are runaway Toyotas and distracted driving. But what if these aren’t the most important factors driving the nation’s annual highway death toll, which averages about 100 fatalities a day?

That’s the view of Adrian Lund, president of the Insurance Institute for Highway Safety, who says the U.S. Transportation Department, Congress and the media have gotten sidetracked by issues like texting while driving.

“There’s nothing rational about the way we set highway safety priorities,” Mr. Lund says in the Insurance Institute’s Aug. 21 “Status Report” newsletter.

Mr. Lund’s organization is the safety research and advocacy arm of the insurance industry. The IIHS has been critical of the government’s highway safety policies over the past few years, usually arguing that the government wasn’t moving fast enough to require better crash-prevention technology from auto makers.

Mr. Lund and the Insurance Institute also say recent laws banning motorists from using mobile phones behind the wheel don’t correlate with a significant reduction in accidents.

“You’d think from the media coverage, congressional hearings, and the U.S. Department of Transportation’s focus in recent months that separating drivers from their phones would all but solve the public-health problem of crash deaths and injuries,” he wrote. “It won’t.”

September 28, 2009

You know the stories about “they built ’em better in the old days”?

Filed under: Technology — Tags: , — Nicholas @ 00:13

Here’s an interesting video from the Insurance Institute for Highway Safety (IIHS), pitting a 2009 sedan against a 1959 model at a combined speed of 80 mph:

In the 50 years since US insurers organized the Insurance Institute for Highway Safety, car crashworthiness has improved. Demonstrating this was a crash test conducted on Sept. 9 between a 1959 Chevrolet Bel Air and a 2009 Chevrolet Malibu. In a real-world collision similar to this test, occupants of the new model would fare much better than in the vintage Chevy.

“It was night and day, the difference in occupant protection,” says Institute president Adrian Lund. “What this test shows is that automakers don’t build cars like they used to. They build them better.”

Even with the video evidence, not everyone will be convinced. This is my favourite quote from the Slashdot thread on the topic (I think the comment is offered in an ironic tone):

But then again, back in the 50’s we didn’t need all these fancy crumple zones, seat belts and air bags. Men were real men. Hell, I’ll bet you dollars to donuts any man from the 50’s driving that Bel-Air would have jumped right out of that wreck to help the crying sissy-boy with a cut lip driving that Malibu.

August 15, 2009

QotD: The biggest risk in moving to a single-payer system

Filed under: Health, Quotations — Tags: , , — Nicholas @ 11:05

My objection is primarily, as I’ve said numerous times, that the government will destroy innovation. It will do this by deciding what constitutes an acceptable standard of care, and refusing to fund treatment above that. It will also start controlling prices.

Now, at this point in the discussion, some interlocutor starts chanting what I’ve come to think of as “the mantra”: othercountriesspendlessandhavelongerlifespans. Then they ask me how I can ignore the overwhelming evidence that national health care is superior to our terrible system. Now, what’s odd about this is that all of those countries do precisely what I am concerned about: slap price controls on the inputs, particularly pharmaceuticals. Their overwhelming evidence indicates that I am 100% correct that a government run system in the US will destroy the last really profitable market for drugs and medical technology, and thereby cause the rate of medical innovation to slow to a crawl.

[. . .]

The things that make markets innovate — profit potential — have been mostly squeezed out of the system. The things that hasten market discover — prices — have also been increasingly relegated to central authority. Having something like that in the United States would produce exactly the outcome I’m worried about. So if Matt is right, and this is where the slippery slope ends up, my nightmare will have been realized.

Megan McArdle, “What Does It Mean To Have a Private Health Care System?”, Asymmetrical Information, 2009-08-13

August 12, 2009

QotD: “an abject failure for the Obama administration”

Filed under: Health, Politics, Quotations, USA — Tags: , , , — Nicholas @ 12:34

But who would have thought that the sober, deliberative Barack Obama would have nothing to propose but vague and slippery promises — or that he would so easily cede the leadership clout of the executive branch to a chaotic, rapacious, solipsistic Congress? House Speaker Nancy Pelosi, whom I used to admire for her smooth aplomb under pressure, has clearly gone off the deep end with her bizarre rants about legitimate town-hall protests by American citizens. She is doing grievous damage to the party and should immediately step down.

There is plenty of blame to go around. Obama’s aggressive endorsement of a healthcare plan that does not even exist yet, except in five competing, fluctuating drafts, makes Washington seem like Cloud Cuckoo Land. The president is promoting the most colossal, brazen bait-and-switch operation since the Bush administration snookered the country into invading Iraq with apocalyptic visions of mushroom clouds over American cities.

You can keep your doctor; you can keep your insurance, if you’re happy with it, Obama keeps assuring us in soothing, lullaby tones. Oh, really? And what if my doctor is not the one appointed by the new government medical boards for ruling on my access to tests and specialists? And what if my insurance company goes belly up because of undercutting by its government-bankrolled competitor? Face it: Virtually all nationalized health systems, neither nourished nor updated by profit-driven private investment, eventually lead to rationing.

I just don’t get it. Why the insane rush to pass a bill, any bill, in three weeks? And why such an abject failure by the Obama administration to present the issues to the public in a rational, detailed, informational way? The U.S. is gigantic; many of our states are bigger than whole European nations. The bureaucracy required to institute and manage a nationalized health system here would be Byzantine beyond belief and would vampirically absorb whatever savings Obama thinks could be made. And the transition period would be a nightmare of red tape and mammoth screw-ups, which we can ill afford with a faltering economy.

Camille Paglia, “Obama’s healthcare horror: Heads should roll — beginning with Nancy Pelosi’s!”, Salon.com, 2009-08-12

August 10, 2009

Healthcare systems compared

Filed under: Cancon, Economics, Health — Tags: , , — Nicholas @ 12:55

No, not the usual red-in-tooth-and-claw US system of mercenary medicine against the shimmering city-on-the-hill of [Canadian | British | Swedish | Generic European] socialized medicine. This one is a bit easier to compare: human verses pet healthcare. Theodore Dalrymple discusses the issue:

As a British dog, you get to choose (through an intermediary, I admit) your veterinarian. If you don’t like him, you can pick up your leash and go elsewhere, that very day if necessary. Any vet will see you straight away, there is no delay in such investigations as you may need, and treatment is immediate. There are no waiting lists for dogs, no operations postponed because something more important has come up, no appalling stories of dogs being made to wait for years because other dogs — or hamsters — come first.

The conditions in which you receive your treatment are much more pleasant than British humans have to endure. For one thing, there is no bureaucracy to be negotiated with the skill of a white-water canoeist; above all, the atmosphere is different. There is no tension, no feeling that one more patient will bring the whole system to the point of collapse, and all the staff go off with nervous breakdowns. In the waiting rooms, a perfect calm reigns; the patients’ relatives are not on the verge of hysteria, and do not suspect that the system is cheating their loved one, for economic reasons, of the treatment which he needs. The relatives are united by their concern for the welfare of each other’s loved one. They are not terrified that someone is getting more out of the system than they.

And, yes, I know it’s extremely bad form to quote yourself, but here is what I wrote on the subject back in 2004:

It boggles the mind to think that it is possible for pets to receive faster, better-organized, more personalized, and more friendly healthcare than their human owners are able to get. And it’s absolutely true.

My wife works in a vet clinic. I know how much the staff at the clinic care about their patients and the families of their patients. They do their very best to ensure that the cats are properly diagnosed and treated. But they are paid for their work . . . by the families of the patients.

One of the comments on Marcel’s original post talks about “the Vet’s next Porsche purchase”. That by itself shows the utter ignorance of the commentator: you do not go into veterinary medicine to get rich. For the length of academic study, it’s probably the worst-paid bio-science field there is. The veterinarians, vet assistants, and vet technicians could all earn significantly higher wages in other fields for the same investment of time and money in training.

Medicine, whether for humans or for other animals, is an expensive field: typical Canadians don’t really know this, as a rule, because we don’t pay for it directly. Vets, as a rule, don’t have the latest and greatest equipment because they are running private businesses which have to finance equipment purchases out of their own funds. They generally have the best compromise they can manage between what’s available and what’s affordable.

Treatment for patients must be decided with an eye to costs: Fluffy may need treatment X, but if it’s going to cost hundreds or thousands of dollars, Fluffy’s owner is left with an unwelcome decision to make. We never think of this in terms of our own healthcare: instead of rationing by dollars, we ration by time. The resources are still scarce, but we pretend that delaying surgery for a painful ailment is better than paying extra to get the surgery done sooner; in fact, in Canada, there’s no choice involved at all.

The other pernicious effect of hiding the actual costs is to increase the demand for relatively trivial treatments (which could often be taken care of by family doctors, walk-in clinics, or even pharmacists). If you never see a bill, you never feel any reason to limit your personal demand on the system. It’s rational for you to extract as much personal benefit from the system as possible: you paid taxes to support it, right?

August 7, 2009

The error of being generous to your opponents

Filed under: Economics, Government, Health, USA — Tags: , — Nicholas @ 12:48

Megan McArdle is called to task for making a mistake . . . through being too generous to her opponents:

I erred so low because I was trying to be charitable to the cause of national health care. You see, the reason that insurance premia are so high in New York State is that New York State enjoys community rating, guaranteed issue, and a very generous bevy of mandatory services. The result is that the cost of insurance is very, very high. What I failed to realize was just how radically out of line New York’s rules had pushed its health care costs. The average premium across the United States has increased about 25% since 2004. In New York, the rate of inflation has apparently been about 16 times that. I wasn’t “aware” that insurance premiums have doubled and tripled over the last seven years, because for the country as a whole, this isn’t true.

So yes, John, the Atlantic’s economics expert didn’t realize just how much the kind of regulations Democrats are now pushing had managed to screw up New York’s health insurance market. In trying, while writing a blog post on the fly, to err on the side of charity towards my ideological opponents, I grossly misled my readers. Massive state interference in the insurance market is clearly much, much worse than I — the eternal pessimist! — managed to imagine. Thanks for calling that oversight to my attention.

QotD: It’s not insurance, it’s welfare

Filed under: Health, Quotations — Tags: , — Nicholas @ 00:06

Have [New York Times writers and editors] no understanding of risk management? If it is controversial for health insurers to reject sick applicants, it should be controversial for life insurers to refuse to insure the already dead, and for car insurers to refuse to insure cars that have already been wrecked.

Doing that may be required by Congress and cheered by the New York Times, but that doesn’t make it a good thing for America. It doesn’t even make it insurance. It’s welfare. We can debate whether such welfare is good policy, but let’s discuss it honestly. Calling welfare “insurance” muddies thinking.

Requiring insurance companies to cover the sick takes away insurers’ power to encourage safer behavior. This will soon turn insurance into a form of expensive, taxpayer funded welfare.

John Stossel, “Welfare, Not Insurance”, John Stossel’s Take, 2009-08-05

July 28, 2009

QotD: Re-interpreting that number

Filed under: Government, Health, Quotations, USA — Tags: — Nicholas @ 07:38

There have been two trends in US health care over the last decade. On the one hand, a lot of Americans have become, in any rational sense, over-insured: They get tested for things they’ll never get. On the other, there has been an abandonment of health insurance by the rich. If you peel the Census Bureau and DHHS figures, of those alleged “45 million uninsured Americans”, one-fifth aren’t Americans; another fifth aren’t uninsured but are covered by Medicare; another two-fifths are the young and mobile (they don’t have health insurance, but they don’t have life insurance or home insurance, either: they’re 22 and immortal and life’s a party); and the remaining fifth are wealthier than the insured population. Really. According to a 2006 Census Bureau report, 19 per cent of the uninsured have household income of over $75,000. Since the last round of government “reform” in the Nineties, wealthy Americans have been fleeing insurance and opting to bring health care back to a normal market transaction. And, if you look at the “uninsured discount” offered by doctors, one can appreciate that, for everything but chronic disability, it’s not an irrational decision to say I’ll get a better deal for my broken leg or my colonoscopy or my heavy cold if I just write a check for it.

Mark Steyn, “The Nationalization of Your Body”, National Review, 2009-07-28

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