141. The Insurance Industry in America
- Author:
- Robert E. Litan and Richard J. Herring
- Publication Date:
- 03-2004
- Content Type:
- Policy Brief
- Institution:
- The Brookings Institution
- Abstract:
- Economists and insurance experts have studied the industry for many years and have developed a series of theoretical concepts to explain how insurance markets function. The prevailing view of the demand for insurance was summed up by one conference participant who noted that an economically rational consumer would understand that apart from certain tax benefits, when you buy insurance, you're making a bet with an insurance company, which the insurance comp any wins on average because it must cover administrative costs and earn a competitive return for its shareholders. From this perspective it makes sense to insure only against potential losses so large as to affect your standard of living. But that is not always how consumers behave.
- Topic:
- International Relations, Foreign Policy, Government, and Political Economy
- Political Geography:
- America