New US Economy Policy Message Board

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Strategies & Market Trends : New US Economy Policy

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To: Arthur Tang who wrote (30)	5/5/1997 7:23:00 AM
From: Arthur Tang	of 435

The new economy and risk management. The economy is perking along; but a flood disaster can wipe out part of the economy. A wide area strike by unions, an earth quake, a cancerous growth on human beings, or an automabile with insufficient bumpers like what they are producing today are examples of concern. People generally only consider their insurance but not the cost of insurance. Risk management therefore has to consider the cost of insurance and the survival of insurance company as well. The risk management concept is relatively simple. The cost of insurance goes up with the damaged values. We have to start with the problem and the products. Recently the automobile manaufacturers redesigned the bumper system; where a collision of more than 5 miles can total your new car. Not so with your 10 year old cars. The insurance 10 years ago was $1000/year; now it is more than $2500/year. Japanese cars generally gets totaled by a frontal collision. To reduce the insurance fee, therefore, the bumper system has to be redesigned to replace only the bumpers and not the entire front section with the engine compartment. Catastrophy health care has to be prevented by eating variety of food so that no repeated wrong food intake can be blamed. Houses and large buildings has to be built on steel I beam construction so that earth movement will not shattered the upper structure. Flood containment means raising barriers or digging the channels deeper to prevent repeated disaster. Casualty and healthcare insurance plays a large part in our economy. The solution is for the insurance companies to advise the manufacturers or towns or people to prevent costly loses by redesign.

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