1. Read the article: Earthquake Insurance in the Decision Making folder under Topic 9.
Based on your reading of this article:
a. Why is earthquake insurance less expensive in New Zealand than in the United
States? Alternatively, why is it more expensive in the United States than New
Zealand?
b. Why is earthquake insurance compulsory in New Zealand? Consider the
rationale for this public policy.
c. What role does ‘charity hazard’ play in the low take up rate of earthquake in
some parts of the United States?
2. Review the article: Drivers Are Overwhelmingly Receptive to Usage-Based Auto
Insurance, According to Towers Watson Survey in the Usage Based Pricing folder
under Topic 9.
a. Is Pay as You Drive Insurance an example of Risk Based Pricing?
b. How would the installation of a telemetric device to record driving habits and
distances impact the insurer’s ability to correctly classify and price risk?
3. Refer to the article: Health care act? No, thanks; we’ll take care of ourselves in the
Decision Making folder under Topic 9.
a. What impact does the ACA have on the decision of a firm in terms of selffunding
their healthcare benefits?
b. What Risk Financing Option did NorthBay Adventure select to finance its
employees’ health care costs?
c. Why did the company select that Risk Financing option?
d. How have the states discussed reacted to the choice made by NorthBay
Adventure and other companies? Why have the states done so? What do they
feel the result will be if other companies choose the same risk financing option?
