CAS.GOVTINS

Question 1

5 reasons for government participation in insurance

Answer 1

Filling needs unmet by private insurance

Compulsory (when insurance is compulsory)

Convenience (government may already have necessary structures in place)

Efficiency (agent commissions eliminated, lower premiums for consumer)

Social purposes (private market is motivated by profit, sometimes at the expense of social purposes)

Question 2

3 levels of government involvement in insurance

Answer 2

• Government as a SOLE provider
• Government in partnership with private insurance
• Government in competition with private insurance

Question 3

How can government subsidize losses (2)

Answer 3

• general tax revenue
• by charging less than actuarially sound rates

Question 4

Why may efficiency of government insurance be overstated

Answer 4

Other government departments may already be performing services normally provided by insurer but the cost of these services may not be included in expenses (true expenses understated)

Question 5

3 criterias used to evaluate government insurance programs

Answer 5

• is it insurance or welfare
• is it necessary or serves social purpose
• is it efficient