Considerations of cost trade-offs in insurance solvency surveillance policy
A procedure for identifying potentially insolvent insurers on a cost-effective basis is presented. It involves a loss cost function where the costs of conducting an investigation on a healthy institution are considered in relation to the costs of not identifying a cash-strapped institution. This function is dependent on a model which provides a ranking of financial institutions according to their probability of insolvency. Testing of the process showed that it provides crucial information on achieving optimal resource allocation for solvency surveillance. It was also found to be a good predictor of insolvency.
Publication Name: Journal of Banking & Finance
Make provisions while you still can
The British government has set up a Royal Commission to examine the issue of long term care, which has become important due to the ageing of the population and consequent likely increase in demand for such care. Local government and the aged themselves fund long-term care, with help available on a means tested basis. The government could encourage people to provide for their own care through tax incentives. Products available to help fund care include pre-funded insurance and impaired life annuities.
Publication Name: Investors Chronicle
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