Wednesday, April 18, 2012

Cavalcade of Risk #155

Welcome to the Disease Management Care Blog's hosting of this 155th Edition of the Cavalcade of Risk.

If this is your first visit to a Cavalcade, think of it as a linked collection of the latest observations from a variety of blog authors on the broad topics of insurance and business risk. Since the DMCB frequently examines health insurance, it couldn't turn down the chance to be this edition's host.

And without further ado......

Are you interested in the intersection between insurance concepts and actuarial mathematics? Here's you chance to find out if that's just a passing fancy or the real thing when you read the Healthcare Economist Blog's review of an academic paper on the pernicious asymmetry of "private information" in the individual health insurance market.  While the MIT analysis may explain the uninsurability of some persons, the DMCB has gotten a new appreciation of the unreadability of the actuarial literature.

In contrast, the PT Money Blog provides a very readable posting on an informal survey conducted by the PTMB of some other finance-writer-bloggers about the wisdom of buying long term disability insurance. It turns out that cheap disability insurance is typically available through employer arrangements or trade associations, while individual policies are unaffordable. Yet, those who are lucky to get the insurance would be well advised to read the small print to determine if the long-term pay-outs are indexed to inflation. The DMCB was interested to see that some of the survey respondents were interested in insuring their blogging income.  In response, the DMCB spouse points out that it's time to reconsider the DMCB's resistance to revenue-producing ads, pop-ups, faux surveys, endorsements, product placements and promotions.

What happens when an insurance expert's house burns down? Well, one thing Marcus Cree does is write about it in the Risk Management Monitor Blog. It turns out that managing a home fire involves risk assessment prior, using the contingency planning during and mitigating the effects after the tragedy. It also involves blogging about risk assessment, contingency planning and mitigation and then making the DMCB blog about the blogging about risk assessment, contingency planning and mitigation instead of checking its smoke detectors. Ironic? You be the judge, because instead of reading this, you could be checking....

And what happens when a smart blogger reads about health status and smart phones?  David Williams over at the Health Business Blog shows that readers should be creeped out by the ability of advertisers to correlate their location and network use to come up with some surprising insights about their personal behaviors.  The DMCB asks if advertisers can do this, what could happen when health insurers offer free cell phones to their insureds? What's more, if you're reading this on your hand held device, should nosey third parties conclude that you are uncommonly smart and send you a Groupon offer for half off on a subscription to an actuarial journal? The DMCB says the answer is yes.

And what happens when a finance professional reads about the awful long term effects of repeated head trauma?  Well, it seems they blog about that too.  My Wealth Builder played high school and college football for eight years and blogs about his worry that some underlying brain damage may eventually catch up with him. The DMCB is happy to report that its approach to avoiding football-related head injuries has been to give the football during any game to whoever wanted it.  In retrospect, that was a savvy risk mitigation strategy,  even if it meant being banished to the chess club.

If you have mortgage life insurance, you may want to rethink the wisdom of paying that premium, says the Boomer and Echo Blog.  That's because that class of insurers has a reputation for denying claims and continue to charge the same premium even as the mortgage amount declines.  B&E points out that simple term insurance can cover the mortgage and more for a smaller premium.  Which makes the DMCB ask: Where was this sense of responsibility before the mortgage meltdown?

Are you eating your veggies? Louise of the Colorado Health Insurance Insider ponders the risks of not having a proper produce stand close by and wonders if our calorie dense lifestyle is the real culprit behind our spiraling health care costs.  Be forewarned, however, because the answer may involve a veggie with awfulness that is only exceeded by the turnip: brussel sprouts.  Now that is risk that the DMCB would willingly pay to have transferred.

Russell Hutchinson of the Chatswood Moneyblog writes on how good direct channels can help to increase the total size of the market by reducing barriers to entry for buyers that need low prices points, ease of access, and channels they can control. This increases access to entry level products that they then trade-up when they subsequently consult financial advisers.

Many readers have heard about the Jet Blue pilot who loudly and bizarrely acted out after his alarmed co-pilots barricaded the cockpit.  Jon Coppelman of the Workers Comp Insider Blog examines the policy implications of trying to minimize the impact of mental illness, meeting the expectations of a flying public and doing right by the individual patient.  The DMCB will be flying tomorrow and will also try to do right by resisting the temptation to roll its eyes at passengers with no hope of fitting their large bag in that small overhead space or jab that annoying neighbor who is hogging the arm rest.  Otherwise it might also act out.  You've been warned.

Last but not least, for an example of the DMCB's bloggery, check out this post on the hazards for small physician practices that enter into risk contracts.  Without a sufficiently large base of patients, they can run afoul of the "law of large numbers."  Insurers know this and are understandably reluctant to let a small practice become financially crippled, even if it is a medical home.

The next Cav of Risk host will be the Free Money Finance Blog.


H G Stern said...

Outstanding job, Jaan!

I esp appreciate all the commentary for each post - VERY helpful!

Thanks for hosting!

Louise said...

What?! Awfulness and brussels sprouts definitely do not belong in the same sentence! Although I'll admit that turnips might not be the most tasty of treats :) Great Cav, and thanks for including our post.