Is the Insurance Business Viable?
12 Pages Posted: 25 Feb 2016 Last revised: 25 Apr 2016
Date Written: June 30, 2003
The insurance business is fraught with problems for which, in many insurance lines, a solution that is acceptable to consumers and leaves the insurance business viable is not likely. We analyze the factors that create this situation. Consumers often view economically viable premiums as too high. In these cases, the tendency of private insurers is to abandon those lines to avoid failure. Pressure then mounts for government to provide insurance at "affordable" premiums or for government to force the insurance companies to do so. The results of the availability of such affordable insurance are not in consumers' interests.
Keywords: Insurance, government regulation, stock valuation, investment analysis, insolvency, health insurance, medicare
JEL Classification: G10, G11, G12, G14
Suggested Citation: Suggested Citation