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November 21, 2005
You are on the invidual archive page of Pricing bird flu. Click Simon World weblog for the main page.
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Pricing bird flu
From The Standard: Some Chinese insurance compnies are taking a big chance on the possible spread of avian influenza among humans as an opportunity to expand their business. Beijing Minsheng Life Insurance on November 7th was first to launch a policy that would pay the insured if they are infected by the H5N1 virus. Four days later, Shenzhen based Hua-an Property Insurance followed. The Hua'an policy costs 100 yuan for each 200,000 yuan of compensation. It is valid for a year for anyone aged 3 to 70. Analysts say the odds are that the two insurers will make money given what they consider is the low probability of a serious pandemic.A couple of interesting implications. Firstly these insurance companies are putting the chance of dying from bird flu in the next year at 0.05%, and that includes their profit margin so in reality it's even lower. You won't read that on the front page of the panicky press. Secondly this could be a great opportunity for these Chinese insurance firms to expand offshore - imagine the demand around the world for these kind of products. Thirdly, it's good to see the private sector becoming part of the policy solution in preparing for bird flu. Lastly, this is a perfect example of innovative capitalism at its finest - a pricing of risk in response to clear demand. All from the heart of Communist China. Eventually the world will learn it can sometimes learn from China. Update: There's also coming Tamiflu futures. posted by Simon on 11.21.05 at 10:12 AM in the China food/environment/health category.
Trackbacks:
TrackBack URL for this entry: http://blog.mu.nu/cgi/trackback.cgi/129372 Send a manual trackback ping to this post. Avian Flu Insurance Excerpt: According to Simon World, a Chinese company is offering insurance for bird flu - about $12 for a pay-out of about $25,000 for a one year term. It appears that the insurance company considers the probability to be pretty low. Weblog: The Lone Elm Tracked: November 22, 2005 10:21 AM
Comments:
$100 a year for $200K of coverage just for bird flu? It's a rip. I can get $250K of term-life coverage covering everything except war and skydiving for $250 posted by: Anon on 11.22.05 at 04:30 PM [permalink] |
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