Max's example of insurance is on the spot. Originally, as I understand it, insurance began with shipowners sharing risks among themselves. In this way, though individual shipwreck could destroy a prosperous shipowner.
With the great fire of London of 1666, early capitalist business took note of the possibility of catastrophic risk. Soon afterwards, William Petty and some friends began developing actuarial tables that were were first used in life insurance. Fire insurance was regarded as a charitable operation, meaning that it was not intended to make profit, but only to help in case of disasters. The Price Anderson Act represents another case in which society bears the risk for private business. While business risks are privatized, individuals remained vulnerable. The shredding of medical coverage is the case in point. Max Sawicky wrote: > The insurance case is on the table now. There is an > interesting column today in the Post by Warren Buffet; > his company sells insurance and lost a few billion last > month. > > He makes what to me is a persuasive point that the > costs of some disasters exceed the total capitalization > of the industry, much less any company, so the could > not be expected to insure against them. I don't know > how you hedge against a suitcase nuke. At the same > time, business firms cannot function without insurance. > So a government role would seem to be called for. > To his credit, Buffet notes that any public backstop > of this type ought to be financed with a tax on > insurance premiums. > > mbs > > >>>>>>>>>>>>>>>> > > Fred's note should open up what I consider to be a very important topic > that I have never seen fully analyzed. I would love to see more > exchanges about the subject here. . . . -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
