C. Arthur Williams

Risk management and insurance

Part I An Overview of Risk and Risk Management Chapter 1. An Introduction to Risk and Uncertainty Chapter 2. An Introduction to Risk Management Chapter 3. A Rationale for Risk Management in Organizations Part II Risk Assessment Chapter 4. Risk Identification Chapter 5. Risk Analysis: Exposures of Physical Assets Chapter 6. Risk Analysis: Exposures of Financial Assets Chapter 7. Risk Analysis: Exposures of Human Assets Chapter 8. Risk Analysis: Exposures to Legal Liability Chapter 9. Risk Analysis: Exposure to Work-Related Injury Chapter 10. Risk Measurement Part III Risk Measurement Methods Chapter 11. Risk Control Chapter 12. Risk Financing Techniques I Chapter 13. Risk Financing Techniques II Chapter 14. Risk Management Decision Methods: Data Organization and Analysis Chapter 15. An Overview of Risk Part IV Insurance Markets and Functions Chapter 16. An Introduction to the Insurance Industry Chapter 17. The Pricing of Insurance Chapter 18. Insurance Regulation and Financial Assessment Part V Analysis of Insurance Coverage Chapter 19. Legal Aspects of Insurance Contracts Chapter 20. Insurance Contract Analysis: Property and Liability Coverage Chapter 21. Property and Liability Insurance Contracts Chapter 22. Insurance Contract Analysis: Life Insurance Part VI Benefit Programs Chapter 23. Health Care Financing and Health Insurance Chapter 24. Employee Benefit Plans Chapter 25. Design Issues in Employee Benefit Plans

Regulating Property and Liability Insurance Rates through Excess Profits Statutes

Excess profits statutes in six states require automobile insurers to return excess profits, if any, to their policyholders. This article discusses the issues that must be resolved in drafting and implementing an excess profits statute. For example, what is the long-run reasonable rate of return? What allowance should be made for short-run fluctuations around the reasonable rate of return? The article also examines carefully the only two statutes (Florida and New York) that have been implemented to date. Finally, it presents the cases for and against excess profits statutes as a supplement to existing forms of property and liability insurance rate regulation.

Highlights and Conclusions

On July 6, 1990, workers’ compensation reached its 106th birthday. Despite many inherent problems, criticisms, and proposals to eliminate workers’ compensation as a separate program, in most nations this no-fault approach to compensating employees for work accidents and injuries has been able to preserve its identity and importance.

Workers’ Compensation Programs Throughout the World

Workers’ compensation programs in 136 nations are summarized in this chapter and the next. This chapter tells how many of these nations have each of several possible provisions related to coverage, medical expense benefits, disability benefits, death benefits, and funding of the program. As noted in chapter 1, Australia, Canada, and the United States are classified according to the most common province or state characteristics. The next chapter describes how workers’ compensation programs differ among nations according to (1) the continent in which they are located, (2) their income status, and (3) the security system used—a social insurance system, compulsory workers’ compensation insurance, or voluntary workers’ compensation insurance.

Workers’ Compensation Standards

Two sets of standards have been developed for evaluating workers’ compensation programs. The first, which is the more relevant for international comparisons, is Convention 121 (Convention Concerning Benefits in the Case of Employment Injury) adopted in 1964 by the General Conference of the International Labor Organization. The second set was proposed in the United States in 1972 by the National Commission on State Workmen’s Compensation Laws. Although directed toward state programs in that nation, the Commission’s recommendations are also relevant because they were based on 60 years of experience, at first with programs in only a few jurisdictions but, since 1948, with diversified programs in all 50 states plus the District of Columbia and two federal programs—one covering federal government employees and the other covering longshore and harbor workers.

Workers’ Compensation Programs in 13 Nations: More Details

The preceding two chapters have summarized the characteristics of the workers’ compensation programs of 136 nations throughout the world. This chapter discusses in more detail the programs of 13 of these nations.

Basic Concepts and Design Characteristics of Workers’ Compensation

In 1884, Germany introduced workers’ compensation (WC) to the world. Poland enacted a WC law the same year. Czechoslovakia and Austria followed in 1887. By 1900, 11 nations had WC programs; by 1950 the number was 109 and still growing. Of the 141 countries included in the Social Security Programs Throughout the World—1987 published by the U.S. Social Security Administration (1988), all but five had some type of WC program. For 106 of the 136 countries with WC, WC was their first social insurance program. For eight of these nations, most of them located in Africa, worker’s compensation is still their only social insurance program.

Classification of Workers’ Compensation Programs

Chapter 3 summarized the workers’ compensation program in 136 nations. This chapter will summarize the benefits for subgroups of these 136 nations categorized according to (1) six continents, (2) five income statuses, and (3) three security systems. The objective is to investigate the relationship, if any, between any of these characteristics and a nation’s workers’ compensation system. For example, one would expect higher income nations to cover more workers, provide more generous benefits, and incur higher costs.