Evaluation of An Government Insurance Program
How well have the federal and state government performed in providing insurance?
According to Greene the [three criteria] to be considered are:
- [Necessary] Is the provisions of the insurance by government necessary: Does it achieve a social purpose that cannot be provided by private insurance?
- [Funding] Is it insurance or a social welfare program? Social welfare is designed to provide benefits to qualified people based on demonstrable need for assistance without any payment or contributions by those receiving assistance. these benefits are usually financed by general tax resources. The public welfare programs are an example of social welfare.
- [Efficient] Is the program efficient and/or is it accepted by the public?
~ Government Insurers, Issues in insurance, American Institute for Property and Liability Underwriters, Vol. 1 4th Ed. 1987.
A efficient program is typically “accepted”. Sometimes its hard to tell if a government program is efficient as costs are hidden, but if the public approves, buy the coverage it provided one could assume it has been relatively efficient. It would seem silly for the government to get involved in unnecessary public insurance – so there should be a good reason. Furthermore it is best if the insurance program isn’t actually just a glorified “social welfare” program.
The above table shows the evaluation of several countries flood coverages. You can see the follow the basic premise provided by Greene 20 years earlier:
- Necessary? (Mandatory / Public / packaging)
- Funding source? (tax / premiums / pricing / subsidization)
- Accepted (take-up rates)
For example, the Russian model is not efficient as take-up rates are <5%. Although it is also not government funded. Flood coverage is hard to provide without some level of government involvement – either as a catastrophe back-stop or funding source.
If someone can track down the source material: Issues in Insurance, American Institute for Property and Liability Underwriters, Vol. 1, 4th Ed., 1987 I would really enjoy reading it to see what it actually says.