Nancy R. Mansfield

Probability Updating and the Market for Directors’ and Officers’ Insurance: Probability Updating and D&O Insurance

Over the past decade, much attention has been given to the topics of corporate governance and corporate risk management. One increasingly important insurance product associated with each of these issues is directors’ and officers’ (D&O) liability insurance. Given the interconnectedness that exists between D&O insurance, corporate risk management, and corporate governance, we exploit industry�?specific D&O data to explain how industries most associated with the corporate scandals of the early 2000s adjusted demand patterns during periods of certainty and uncertainty. The rich data set coupled with dramatic changes in the marketplace allows for the testing of insurance demand patterns and enables us to offer insight into the markets response to a unique type of loss shock. The results of this study suggest evidence in favor of demand�?side probability updating, whereby those industries most associated with the corporate scandals of the early 2000s adjusted the demand for D&O insurance during periods of greater uncertainty.

How Does the SCHIP Exclusion Affect Health Insurance Coverage for Children of Low Income State Workers

A provision of the law that created the State Childrens Health Insurance Program (SCHIP) to provide low cost coverage for moderate income children whose parents do not have employment-based coverage excludes children whose families are eligible for participation in a state employee health benefit plan from enrollment in the states SCHIP program. This exclusion applies even when a child is not covered and would otherwise be eligible for SCHIP based on his or her familys income. This article presents an analysis of the implication of this policy on coverage among state employee dependents and the potential effect on these children. We found no evidence that low income children of state workers were disproportionately lacking coverage from 2002 to 2004, but rapidly increasing premiums in state benefit plans may portend problems for these children.