Lawrence S. Powell

The Role of Internal Capital Markets in Financial Intermediaries: Evidence from Insurer Groups

We exploit the transparency of internal capital markets (ICMs) within insurance groups to investigate the activity and efficiency of ICMs within insurance groups. Specifically, we compare the relationship between internal capital transfers and investment to that between capital from other sources and investment. The ability to track the actual ICM transactions allows for more direct analysis of ICM activity than most previous studies. Consistent with theory, we find evidence that ICMs play a significant role in the investment behavior of affiliated insurers. We then use these detailed data to execute a more direct test of ICM efficiency than currently exists in the literature. Consistent with ICM efficiency, results suggest that capital is allocated to subsidiaries with the best expected performance.

The Effectiveness of State Legislation in Mitigating Moral Hazard: Evidence from Automobile Insurance*

Insurance fraud, which adds an estimated

OBESE NURSING HOME RESIDENTS: A CALL TO RESEARCH ACTION

85 billion per year to the total insurance bill in the United States, is an extremely serious problem for consumers, regulators, and insurance companies. This paper analyzes the effects of state legislation and market conditions on automobile insurance fraud from 1988 to 1999, a period exhibiting a substantial increase in the enactment of antifraud legislation. Our empirical results show that the laws have mixed effects: two laws have no statistically significant effect on fraud. The strongest evidence of fraud mitigation effects is associated with mandatory special investigation units, classification of insurance fraud as a felony, and mandatory reporting of professionals to licensing authorities. However, laws requiring insurers to report potentially fraudulent claims to law enforcement authorities actually increase fraud, which may reflect some substitution from more efficacious private efforts to less productive state activity. Many underlying characteristics of the market also affect fraud.

The Effectiveness of Insurance Fraud Statutes: Evidence from Automobile Insurance

activities. Occupational therapists are also trained in activity analysis and activity demands and can make recommendations on activity and environmental modifications to reduce pain. Occupational therapy is a great alternative or addition to the traditional approach to pain management, and doctors should recommend it to their patients to help them better manage their pain and remain independent older adults. With evidence to support that pain limits function and that there is a high prevalence of pain in older adults, there is a need to address pain management in older adults. If pain were managed better, older adults might be able to remain independent for longer, which might help lower healthcare costs and prevent or prolong the need for nursing home placement and skilled nursing care. More focus needs to be spent on assessing and managing pain in older adults. Healthcare professionals should work closely with their patients to monitor their pain and explore the variety of different pain management options available to find a pain management system that works well for each patient. My experiences working in the healthcare field as a certified occupational therapy assistant have shown me that there is not enough emphasis placed on managing pain. Too often, patients are left with a prescription for medication as their only option for relieving pain. More time needs to be spent investigating alternative approaches to pain management and pain relief such as occupational therapy.

Internal versus External Capital Markets in the Insurance Industry: The Role of Reinsurance

Insurance fraud, which adds an estimated

Computing Value at Risk: A Simulation Assignment to Illustrate the Value of Enterprise Risk Management

85 billion per year to the total insurance bill in the U.S., is an extremely serious problem for consumers, regulators, and insurance companies. This paper analyzes the effects of state legislation and market conditions on automobile insurance fraud from 1988 to 1999, a period representing a substantial increase in the enactment of antifraud legislation. Our empirical results show that the laws have mixed effects; two laws have no statistically significant effect on fraud. The strongest evidence of fraud mitigation effects are associated with mandatory Special Investigation Units, classification of insurance fraud as a felony, and mandatory reporting of professionals to licensing authorities. However, laws requiring insurers to report potentially fraudulent claims to law enforcement authorities increase fraud, which may reflect some substitution from more efficacious private efforts to less productive state activity. Many underlying characteristics of the market also affect fraud.