Hw pt1 wk3 Assignment Example | Topics and Well Written Essays - 250 words

Hw pt1 wk3 - Assignment ExampleThe other reason for the choice of insurance companies not to offer flood insurance is that they have to interrogation on risks of floods and if they offer flood insurance, they have to set premiums at equilibrium with expected loss. Frequent floods make payments of premiums frequent leading to zero insurance, except for senior high end clientele who can afford to pay high premiums. Insurance in the United States and United Kingdom exist only owing to gold and subsidization but runs at a loss.There be two reasons suggested for Canada to adopt cross-subsidization scheme. The first reason is the belief by people that they are cover for floods yet in reality they are not, which hurts the insurance industrys image. Secondly, it will provide growth opportunities owing to the fact that the insurance industry is a mature industry. Cross-subsidization entails payment of premium by non-risk homes but may result in moral hazard including building homes in hig h risk areas because they are insured.Watson, William. William Watson Why universal flood insurance is a badidea. July 4, 2013. Retrieved from http//opinion.financialpost.com/2013/07/04/william-watson-why-universal-flood-insurance-is-a-very-bad-idea/ on February 19, 2014.