Loss Payments Research Articles

Treating the innocent victims of trolleys and war.

Both trolleys and war leave innocent victims to suffer death and injury. Trolley problems accounting for the injured, and not only the dead, tease out intuitions about liability that enhance our understanding of the obligation to provide compensation and medical care to civilian victims of war. Like many trolley victims, civilians in war may suffer justifiable, excusable, or negligent harms that demand compensation. Chief among these is collateral harm befalling civilians. Collateral harm is endemic to war and comprises permissible but unavoidable death or injury following necessary and proportionate military operations. Although state armies sometimes offer condolence payments for civilian death, injury, and property loss, they deny liability. Instead, they use compensation to enhance counterinsurgency efforts and assuage feelings of agent regret. As part of the medical rules of eligibility, Coalition forces in Iraq and Afghanistan also provided medical care to victims of collateral harm. However, they denied care to similarly sick or injured civilians. While compensation is often justified to cure the harm civilians suffer, the differential use of medical resources is not. Rather, medical care remains subject to the principle of beneficence and medical need. The duty to provide civilian healthcare in war, particularly in wars of humanitarian intervention, is far-reaching and imposes significant costs that military and medical ethics are yet to recognize.

Can Investment Views Explain Why People Insure Their Cell Phones But Not Their Homes?—A New Perspective on the Catastrophe Insurance Puzzle

The consistently missing demand for catastrophe insurance and for coverage of other low-probability–high-consequence risks is often referred to as the catastrophe insurance puzzle. People show reluctance to insure low-probability–high-consequence events, even with some disastrous consequences, yet insure against small high-probability–low-consequence events. There has been no convincing explanation of this puzzle to this date. This article points out that the underlying rationale may be that individuals interpret insurance contracts with low payout probability as an investment with negative expected net present value. While premium payments start with the conclusion of the contract, usually there is only one loss payment in the near or far future. Using a simple annuity model with fixed annual premiums and expected indemnity payouts, it is found that even an individual characterized by the degree of risk aversion found in the literature is unlikely to purchase insurance with these characteristics. To alleviate this unfavorable insurance purchase syndrome, combining a low-probability with a high-probability loss insurance contract may be a way to incentivize individuals to purchase catastrophe risk coverage.

Revealing the effect of an industrial flash flood on vegetation area: A case study of Khusheh Mehr in Maragheh-Bonab Plain, Iran

Floods are one of the most significant environmental hazards that can have harmful effects on agricultural activities and vegetation. The primary objective of this study is to analyze the destructive after-effects of an industrial flash flood on the vegetation of the Khusheh Mehr region. This flash flood occurred due to a break in the wastewater ponds of the Kaveh Soda factory on April 25, 2010. Using the Normalized Difference Water Index (NDWI) and the Normalized Difference Vegetation Index (NDVI) derived from time-series Landsat data over the period of 2000–2020, we analyzed the changes in wastewater ponds and regional vegetation before and after the wastewater flood occurred. We also investigate the quantitative and qualitative changes in vegetation during the past 20 years and detect the flood passage through this area. The results show that 538 ha out of the total 2123 ha of Khusheh Mehr were directly affected by the runoff resulting from the 2010 flood, and 1250000 m3 of industrial wastewater was discharged in the study area. The analysis of the vegetation in 2010 showed that during May and July, the efficiency and expansion of vegetation in these areas (NDVI >0.3) decreased by 90% and 55%, respectively, compared to the same periods in 2009 and 2006. The study is significant because it can help evaluate the effects of the flash flood not only on wastewater ponds and vegetation but also on the contamination of underground and surface waters as chemicals and industrial wastewater held in natural and artificial environments are discharged during a flood and directly affect vegetation. The findings can provide useful information for hazard and land use management and support policymakers, e.g., payment for financial loss of farmers.

A deductible comparison of cost per-loss, cost per-payment event, loss elimination ratio under exponentially and lognormally distributed severities

The maximum amount of losses retained by the insured under deductible policy modifications is usually set as part of the terms of the policy conditions. The objective of this study are to (i) estimate mean losses of an insured risk by means of the operational behavior of density function with deductible modifications and (ii) compare the mean severities under exponentially and log-normally distributed arbitrary policy in a cost per loss and cost per payment contingencies. The results show that despite the established fact in literature that log-normal severity distribution has a thicker tail than the exponential distribution, its cost per loss payment is correspondingly lower than the corresponding values of the exponential mean loss. Computational evidence over the trend of the change in the loss eliminated in the domain for which deductible has been defined revealed that the cost per loss amount is less than the cost per payment amount in the two models. The method can be used to estimate aggregate claims as the deductible level increases for every scheme holder and such that the estimated claims could be compared with the hypothetical observed claims which can be arrived at by applying the hypothetical deductible value to the background losses.

DISCOURSE ON THE IMPLEMENTATION OF PROGRESSIVE LAW IN RECOVERING STATE LOSSES DUE TO CRIMINAL ACTS OF CORRUPTION

The number of corruption cases in Indonesia that are not appropriately resolved is the cause of the emergence of progressive laws. Public trust in the law began to fade because the applicable law did not determine many problems. The law is not seen as a solution provider, and it becomes a particular problem for law enforcement. This article aims to analyze the concept of recovering state losses due to corruption through the implementation of progressive law. The method used is normative legal research using a qualitative approach. This article concludes that progressive law enforcement to eradicate criminal acts of corruption lies in harmonizing the values contained in society and then realizing those values into reality, where their application is influenced by several factors, including legal substance, legal structure, culture law, professionalism, and leadership. The development of the modus operandi of corruption in hiding assets resulting from corruption encourages the urgency of implementing a progressive law enforcement strategy by implementing 2 (two) strategic steps, namely: a) Taking rule-breaking actions in the form of seizure of the defendant's assets to guarantee payment of state losses; b) The judge gives a contra legem decision in the form of an obligation to pay replacement money without a subsidiary which is preceded by confiscation of the guarantee so that it will close the defendant's room to escape from paying replacement money

Perlindungan Hukum Terhadap Pembeli Atas Kelalaian yang Dilakukan oleh PPAT dalam Jual Beli Tanah Warisan

Land Deed Making Officials (henceforth referred to as PPAT) is the public official who is authorized to make authentic deeds concerning certain legal action regarding land or property rights over flat units. PPAT is demanded to work carefully, thoroughly and responsibly because the PPAT deed is used as evidence for the transfer of land rights. When PPAT is negligent in making the deed then it may result in loss for others. As in the Supreme Court verdict No.156K/Pdt/2020, where PPAT has been negligent in making the deed and resulted loss experienced by the buyer due to the loss payment and the land he had purchased. Even though the buyer has made sale and purchase clearly before the PPAT, that PPAT deed should be able to provide legal certainty. Therefore, this research is trying to analyze and answer the problems on to what extend is the legal accountability of PPAT when the sale and purchase deed of inherited land that made before him is cancelled by the Supreme Court, to what extend is the legal protection for buyer against the negligence committed by PPAT in making the sale and purchase deed of inherited land that has not been divided and whether judge’s decision in the Supreme Court verdict No.156K/Pdt/2020 has accommodated protection for the buyer.

Ex Gratia Payments for Loss of Human Life Due to Wild Animal Attacks in Botswana: Implications for Practice and Policies

Ex gratia compensation is paid only to families of human–wildlife conflict (HWC) victims who are killed by wildlife, not to victims who are injured by wild animals, regardless of the severity of the injury, even if it results in permanent disability. This study was conducted to assess the relevance and effectiveness of ex gratia payments to victims of wild animal attacks. Participants included traditional leadership (chiefs), government officials, wildlife nongovernmental organizations (NGOs), and victims and their caretakers. Local people exposed to life-threatening wildlife attacks express fear and animosity towards wild animals, and they also feel left out from and disappointed by a fragmented government service delivery system. In particular, delays in processing ex gratia compensation payment militate against the effectiveness of the ex gratia compensation scheme. Accordingly, the payment of ex gratia process should be re-engineered to improve its effectiveness so that it serves its novel objectives. This study recommends establishment of an Ex Gratia Scheme or Ex Gratia Tribunal where all HWC injuries or death incidents can be effectively dealt with. Most importantly, compensation should consider health care and rehabilitation, loss of reasonable income, and associated disability care as a result of being attacked by the wild animals.

Attributable societal costs of first-incident obesity-related cardiovascular comorbidities in Denmark

ABSTRACT Background: Obesity is associated with increased societal costs, primarily due to its comorbidities. The objective of this study was to estimate the 3-year attributable societal costs of the first event of cardiovascular comorbidities among people with obesity. Methods: We used an incidence-based cohort study based on Danish national registries. Attributable costs of each event were calculated as the difference between costs of individuals with an event and costs incurred by matched controls. Results: We identified 58,597 individuals with a diagnosis of obesity. On average, 2,038 individuals were diagnosed annually with one or more than ten cardiovascular comorbidities between 2007 and 2013. The 3-year attributable societal costs (health-care costs plus productivity loss) for patients of working age ranged from 8,164 EUR for other ischemic heart disease to 32,203 EUR for hemorrhagic stroke. In the incidence year, costs were mainly driven by health-care costs, while productivity loss and income transfer payments were the primary drivers in subsequent years. Conclusion: The onset of obesity-related cardiovascular comorbidities affected health-care costs and work ability to an extent where sick pay and disability pension were required. Our study demonstrates the need to intensify obesity and cardiovascular disease risk factor management to prevent costly and debilitating obesity-related comorbidities.

Tort Reform and Moral Hazard

States have been enacting tort reforms to reduce the liability of physicians conducting malpractice. However, tort reform may create a moral hazard because physicians may take less care due to reduced liability. This paper investigates whether physician moral hazard presents after tort reform. I study this problem through the lens of medical malpractice insurers who, as the primary payer of medical malpractice claims, have the data and ability to predict the behavioral changes of physicians as well as patients. I look at insurers’ post-reform revisions on loss reserves, which were the overall changes in future expected malpractice losses and can be affected by three factors – physician moral hazard, patients filing fewer claims, and caps on loss payments. Physician moral hazard causes an increase in the expected malpractice losses, whereas the other two factors both lead to reduced loss payments. The loss reserve revision is estimated through the full information reserve revision, which is the reported incurred losses minus an actuarial prediction based on a regression method and previous year’s reserve data. The main identification strategy is a difference-in-difference model. I find that after controlling for state and firm characteristics, insurers adjust loss reserves upward after the enactment of the reform to punitive damages and the reform to joint and several liability rules, indicating the prevalence of physician moral hazard. Punitive damages may unpredictably lead to a catastrophic jury verdict against physicians, and the joint and several liability rules can make physicians liable for losses of others who are jointly liable but bankrupt. The empirical results imply that tort reform that significantly lowers physicians’ financial liabilities can reduce the deterrence effect of law and cause a moral hazard issue.

Disputes on the issues of insurance of ships with participation as a party a legal entity of a foreign state: from the practice of Russian courts

ABSTRACTIn the article researched the law-enforcement practice of the Russian courts of Arbitration jurisdiction. The author analyses the current regulatory acts governing the marine insurance, as well as judicial decisions and resolutions of Russian courts on insurance claims payable due to the payment of losses as a result of the destruction of ship with the participation of foreign individuals and legal entities. The author concludes that judges often side with policyholders. Thus, compliance with the norms of the Russian trade and procedural law allows foreign persons to protect their assets, as well as to receive decent protection of its rights in Russian courts.

Modelling Outstanding Claims with Mixed Compound Processes in Insurance

In general insurance, measuring the uncertainty of future loss payments and estimating the claims reserve are primary goals of actuaries. To deal with these tricky tasks, a broad literature is available on deterministic and stochastic approaches, most of which aims at straightforwardly modelling the overall claims reserve. In this paper by an extended, very general and reproducible case-study, we analyze the reserving process by attributing to each cell of the lower part of the run-off triangle a Compound mixed Poisson Process, calibrated upon both the numbers of claims and future average costs and considering as well the dependence among incremental claims. We provide analytically the moments of both incremental payments and the total reserve. Furthermore, we accordingly consider the probability distribution of the claims reserve, which is necessary for the assessment of the Risk Reserve capital requirement in a Solvency II framework. To test the impact of the model under different scenarios, insurers and lines of business, the case study is thoroughly analyzed by exploiting the Fisher-Lange average cost method.

An application of Mean Escape Time and metapopulation on forestry catastrophe insurance

A forestry catastrophe insurance model due to forestry pest infestations and disease epidemics is developed by employing metapopulation dynamics and statistics properties of Mean Escape Time (MET). The probability of outbreak of forestry catastrophe loss and the catastrophe loss payment time with MET are respectively investigated. Forestry loss data in China is used for model simulation. Experimental results are concluded as: (1) The model with analytical results is shown to be a better fit; (2) Within the condition of big area of patches and structure of patches, high system factor, low extinction rate, high multiplicative noises, and additive noises with a high cross-correlated strength range, an outbreak of forestry catastrophe loss or catastrophe loss payment due to forestry pest infestations and disease epidemics could occur; (3) An optimal catastrophe loss payment time MET due to forestry pest infestations and disease epidemics can be identified by taking proper value of multiplicative noises and limits the additive noises on a low range of value, and cross-correlated strength at a high range of value.

Odd Pareto families of distributions for modeling loss payment data

A three-parameter generalization of the Pareto distribution is presented with density function having a flexible upper tail in modeling loss payment data. This generalized Pareto distribution will be referred to as the Odd Pareto distribution since it is derived by considering the distributions of the odds of the Pareto and inverse Pareto distributions. Basic properties of the Odd Pareto distribution (OP) are studied. Model parameters are estimated using both modified and regular maximum likelihood methods. Simulation studies are conducted to compare the OP with the exponentiated Pareto, Burr, and Kumaraswamy distributions using two different test statistics based on the ml method. Furthermore, two examples from the Norwegian fire insurance claims data-set are provided to illustrate the upper tail flexibility of the distribution. Extensions of the Odd Pareto distribution are also considered to improve the fitting of data.

The Principle of Indemnity in Insurance Law

The principle of indemnity, as one of the most fundamental principles in damage insurance contract is thematic and has a broader subject area than the concept of damage in civil liability. Methodology: This is the principle underlying the two effects: first, due to this principle, the policy holder is obligated to compensate a damage that has been resulted due to the occurring a coverage event on the property of the policy holder in the property insurance and on the people in the insurance of liability. Results: Thus, A defining characteristic of insurance, providing that a loss payment will replace what is lost, putting the insured back to where it was financially prior to the loss without rewarding or penalizing the insured for its loss. In fact, based on this principle, the resulted damage should be compensated totally and ideally. This is known as “positive aspect.” Secondly, the compensation should not lead to the increase in the assets of the victim and it should not be turned into a benefit source for the injured party (the negative aspect). Anyway, although this principle has two different approaches, positive and negative, applying it requires the judicial precedent rely on the positive aspect, unless the contrary is approved. Conclusion: This is a binding principle of damage insurance contracts that insurers are obligated in administering it to compensate the actual loss (assessed) of the victims according to the contents and conditions of issued policy up to maximum insurance obligations. In insurance law approved in 1361, legislator has employed the word “damage” in 15 articles out of 36 articles (1,7,13,10,14,15,16,19,20,21,22,23,28,29, and 30) indicating that damage is highly important in insurance law.

Estimating the Texas Windstorm Insurance Association claim payout of commercial buildings from Hurricane Ike

Following growing public awareness of the danger from hurricanes and tremendous demands for analysis of loss, many researchers have conducted studies to develop hurricane damage analysis methods. Although researchers have identified the significant indicators, there is currently a shortage of comprehensive research for identifying the relationship among the vulnerabilities, natural disasters, and insured losses associated with individual buildings. To address this lack of research, this study will identify vulnerabilities and hazard indicators, develop metrics to measure the influence of economic losses from hurricanes, and visualize the spatial distribution of vulnerability to evaluate overall hurricane damage. This paper has utilized the Geographic Information System to facilitate collecting and managing data, and has combined vulnerability factors to assess the financial losses suffered by Texas coastal counties. A multiple regression method has been applied to develop hurricane damage prediction models. To reflect the pecuniary loss, insured loss payment was used as the dependent variable to predict the actual financial damage. Exposures, built environment vulnerability indicators, and hazard indicators were all used as independent variables. Accordingly, the models and findings may possibly provide vital references for government agencies and emergency planners to establish the hurricane damage mitigation strategies. In addition, insurance companies could utilize the model to predict hurricane damage.

Optimal DR and ESS Scheduling for Distribution Losses Payments Minimization Under Electricity Price Uncertainty

The distribution network operator is usually responsible for increasing the efficiency and reliability of network operation. The target of active loss minimization is in line with efficiency improvement. However, this approach may not be the best way to decrease the losses payments in an unbundled market environment. This paper investigates the differences between loss minimization and loss payment minimization strategies. It proposes an effective approach for decreasing the losses payment considering the uncertainties of electricity prices in a day ahead energy market using energy storage systems and demand response. In order to quantify the benefits of the proposed method, the evaluation of the proposed technique is carried out by applying it on a 33-bus distribution network.

A Multivariate Analysis of Intercompany Loss Triangles

AbstractThe prediction of insurance liabilities often requires aggregating experience of loss payment from multiple insurers. The resulting data set of intercompany loss triangles displays a multilevel structure of claim development where a portfolio consists of a group of insurers, each insurer several lines of business, and each line various cohorts of claims. In this article, we propose a Bayesian hierarchical model to analyze intercompany claim triangles. A copula regression is employed to join multiple triangles of each insurer, and a hierarchical structure is specified on major parameters to allow for information pooling across insurers. Numerical analysis is performed for an insurance portfolio of multivariate loss triangles from the National Association of Insurance Commissioners. We show that prediction is improved through borrowing strength within and between insurers based on training and holdout observations.

Unsettling Business: The BP Settlement Agreement

Two years since the settlement agreement between BP and plaintiffs of the Deepwater Horizon oil spill, myriad challenges to the agreement by BP related to the calculation of business economic loss payments and causation have been filed. While BP has been successful in its efforts to revise the rules for calculation of payments, it has been less successful on the causation issue. This article reviews the history of the settlement agreement, summarizes the status of business economic loss payment claims, and discusses the impact of BP challenges on claimants at all stages of the claims process, including businesses that have previously received payments. © 2015 Wiley Periodicals, Inc.

Optimal Credit Swap Portfolios

This paper formulates and solves the selection problem for a portfolio of credit swaps. The problem is cast as a goal program that entails a constrained optimization of preference-weighted moments of the portfolio value at the investment horizon. The portfolio value takes account of the exact timing of protection premium and default loss payments, as well as any mark-to-market profits and losses realized at the horizon. The constraints address collateral and solvency requirements, initial capital, position limits, and other trading constraints that credit swap investors often face in practice. The multimoment formulation accommodates the complex distribution of the portfolio value, which is a nested expectation under risk-neutral and actual probabilities. It also generates computational tractability. Numerical results illustrate the features of optimal portfolios. In particular, we find that credit swap investment constraints can have a significant impact on optimal portfolios, even for simple investment objectives. Our problem formulation and solution approach extend to corporate bond portfolios and mixed portfolios of corporate bonds and credit derivatives. This paper was accepted by Wei Xiong, finance.

Compensating deserving victims of violent crime: the Criminal Injuries Compensation Scheme 2012

Following the enactment of the Criminal Injuries Compensation Act 1995, a new Criminal Injuries Compensation Scheme came into force, replacing the non-statutory version that was introduced in 1964. The statutory Scheme retained the occasions for compensation but broke the link with common law damages, providing instead for payments to be made on the basis of a tariff of injury awards. But it continued to make payments for loss of earnings, special expenses and additional compensation in fatal cases. Minor revisions were made in 2001 and 2008, but following the government's consultation, ‘Getting it Right for Victims and Witnesses’, a major revision took effect in November 2012. Made largely to reduce public expenditure, this revision substantially limits both the numbers of victims of violent crime to be compensated and the levels of their awards. While this marks a further shift away from the original common law model, the 2012 Scheme remains a unique taxpayer-funded response to victims of violent crime, again prompting the question: why, and to what, extent should the state make financial provision for victims of violent crime that goes beyond welfare? This paper analyses the implications of the government's answer for the Scheme's scope and implementation.