Insurance.

• Position: Bureau News - Discussion

The NBER's Working Group on Insurance, directed by Kenneth A. Froot, NBER and Harvard University, and Howard Kunreuther, NBER and University of Pennsylvania, met in Cambridge on February 6 and 7. Insurance, from a theoretical perspective, is a cornerstone of economic theory. It is used often in textbooks as an example of a pure contingent claim (for example, one that pays off upon flood damage to a house, or death from natural causes). It is also used frequently as an example of markets that run into imperfections (such as moral hazard and adverse selection). Even the imperfections are interesting, of course, since they are affected by contractual form (as is true in corporate finance). The NBER's Working Group on Insurance has a broad focus, encompassing theoretical, empirical, and industrial topics, including: insurance customers and investors; insurance producers; equilibrium; and policy questions. Since its inception, it has convened once a year for a 2-day meeting. Participants in the group are predominantly academics from a variety of fields, plus a group of carefully-selected practitioners.

The program for the February meeting was:

Amy Finkelstein, NBER and Harvard University, and Kathleen McGarry, NBER and University of California, Los Angeles, "Private Information and its Effect on Market Equilibrium: New Evidence from Long-Term Care Insurance" (NBER Working Paper No. 9957, described earlier in this issue under "Health Care") Discussant: David M. Cutler, NBER and Harvard University

Martin F. Grace, Robert W. Klein, and Richard D. Phillips, Georgia State University, "Insurance Company Failures: Why Do They Cost So Much?" Discussant: Dwight Jaffe, University of California, Berkeley

Stephan Dieckmann, Carnegie Mellon University, "An Equilibrium Model with Heterogeneous Beliefs about Rare Events" Discussant: Geoffrey Heal, NBER and Columbia University

Michael Braun and Alexander Muermann, University of Pennsylvania, "The Impact of Regret on the Demand for Insurance" Discussant: Richard J. Zeckhauser, NBER and Harvard University

Thomas Russell, Santa Clara University, "Deductible Aversion and the Design of High Cost Insurance Contracts" Discussant: Howard Kunreuther

Jeffrey R. Brown, NBER and University of Illinois at Urbana-Champaign; J. David Cummins, University of Pennsylvania; Christopher M. Lewis, Fitch Risk Management; and Ran Wei, University of Pennsylvania, "An Empirical Analysis of the Economic Impact of Federal Terrorism Reinsurance" Discussant: Joan Lamm-Tennant, General Reinsurance Corporation

George Zanjani, Federal Reserve Bank of New York, "The Rise and Fall of the Fraternal Life Insurer: Law and Finance in U.S. Life Insurance, 1870-1920" Discussant: David Moss, Harvard University

Jeffrey R. Brown and Amy Finkelstein, "The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market" Discussant: Mark Pauly, NBER and University of Pennsylvania

Richard A. Derrig, Automotive Insurers Bureau of Massachusetts, and Herbert I. Weisberg...