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In a large sample of private credit agreements of publicly traded firms, nearly all agreements contain at least a boilerplate provision requiring the borrower to purchase insurance. In about 80 percent of the agreements, the insurance covenant is more explicit. Four additional features of the insurance covenant are quite common: requirements of coverage for specific risks, naming the lender as a loss payee, mandating that any insurance proceeds be used to repay the loan, and explicit permission for the borrower to self-insure. Credit agreements contain more stringent insurance requirements for borrowers that pose higher credit risk. The insurance requirements are strongly positively correlated with the loan being secured by collateral, which suggests that insurance creates value by protecting lenders from unexpected changes in seniority that might happen following the destruction of collateral. Insurance covenants are an important ingredient of credit agreements designed to create a very safe claim for senior, secured lenders., INTRODUCTION Corporate credit agreements frequently require the borrower to purchase insurance, providing one answer to the long-debated question why publicly traded corporations would demand insurance. Since the seminal work of [...]

It's not every day that a push for more regulation can be construed as a pro-insurance-industry move. But some within the fledgling life settlement industry hope that pro-consumer legislation in [...]

The federal/state Medicaid program is designed to provide health insurance for the nation's poorest, yet between 15 and 20 percent of the population continue to have no health insurance. Classic utility-based insurance theory is examined to see if it well explains why some do and some do not purchase health insurance at the state level or if a host of other non-economic factors are needed. This pooled, cross-sectional time-series analysis shows that the state characteristics most strongly associated with the prevalence of a lack of health insurance is the percent of persons whose income falls below the poverty line, the percent of the state's population that is female and the percent of the population with only a high school education. This analysis suggests that the starting point for policies aimed at limiting the number of insured should be limiting poverty and perhaps recognizing the gender/education influence in designing state eligibility requirements. (JEL I18, I10), Introduction Allegedly the following exchange occurred. 'You know, Ernest, the rich are different from us,' said F. Scott Fitzgerald. 'Yes, I know. They have more money than we do,' responded [...]

Health care benefits are becoming increasingly important in the struggle to keep good employees. Are you aware of all your options? It seems like things were so much simpler just [...]

Life insurance policies need to be reviewed and updated regularly to ensure that policy holders are getting the most value for the money. In reviewing their policies, holders should gather all the facts, examine ownership and beneficiaries, and analyze important policy provisions. They must also consider such issues as buy-sell agreements, deferred compensation, corporate minutes and compliance, self-employed insurance, and group and association insurance.

Companies can protect their interests by negotiating a noncompete pact with prized employees and first exploring the tax consequences prior to termination of life insurance policies. Noncompete pacts should indicate a reasonable time frame and a reasonable geographic area. Firms can also increase their cash flows via an employee stock ownership plan (ESOP) as firms obtain a tax deduction for the fair market value of the stock they contributed to an ESOP.

The market for buying and selling life assurance policies in the UK may grow only if information regarding the operations of the second hand market are provided to policyholders. Assn of Policy Market Makers David Beale believes that lawyers and accountants are not enthusiastic in revealing the said option in life insurance. Beale revealed that 3 billion of the 6.4 billion pounds sterling worth of insurance policies surrendered are tradeable with profit policies. On the other hand, Scottish Widows marketing head David Graham and Whitelaw Wells Financial Planning managing director Peter Griffiths-Buchanan thinks that insurance firms must exert efforts to prevent the termination or sale of insurance policies.

National banks were first allowed to sell insurance in small towns by a Supreme Court ruling in Mar. 1996. Since then, banks have been attempting to increase their market share by offering an assortment of financial services, including all kinds of insurance. These new insurance products make it imperative for bank marketing executives to analyze the insurance field and assess their competitors to realize the most effective ways of penetrating the market and launching their own products. Banks can use direct marketing, third-party arrangements and the Internet in selling insurance., Are you ready to add Term Life to your list of products and services? Changing regulations may pit you against the insurance companies, but do you really want to go [...]

BECAUSE OF ITS TAX-FAVORED TREATMENT, permanent life insurance has long been touted as an ideal vehicle with which to retire estate tax liabilities. But purchasing a large enough policy to [...]

Late policy issuance is still the norm in London, not the exception, despite the lessons of the World Trade Center coverage dispute, according to London market underwriters. However, these underwriters [...]

Holders of personal and business life insurance policies are advised to continually review their policies to ensure that they are not over-insured or are paying too high a premium for unnecessary insurance. For instance, grown-up and financially independent children can reduce premium outlays. Buyers of new policies are also advised to ask for a preferred rating, provided that they are in sound health, a non-smoker and in a low-risk job. For those with old life insurance policies, they should replace them with lower-cost term, whole lifer or variable universal life insurance.

Hours before it was scheduled to expire on Aug. 1, Congress voted to extend the National Flood Insurance Program (NFIP) through Nov. 30. Despite the extension, many critics still believe [...]

Byline: Lindsay Chappell One year ago, as soon as Hurricane Sandy had finished beating the Atlantic coast and rolled back out to sea, car dealers across the New York-New Jersey [...]

The insurance industry is experiencing a financial crisis in the 1990s that is similar to the savings and loan association bailout crisis in 1987. The extent of the crisis is illustrated by the failure of several major insurance firms in 1991. The financial difficulties being experienced by insurance companies are expected to result in higher insurance premium rates and retention rates of workers compensation insurance. Treasury managers must be prepared to cope with these developments to ensure the profitability of their claims. A suggested procedure for evaluating existing claims, minimizing the risks associated with primary exposure, restructuring existing insurance programs is provided., Insurance companies face financial problems on a scale that may have compared with the S&L and banking crisis. In 1991 we saw the demise of several prominent insurance companies including [...]

An insurance policy should give you the comfort of knowing that the collateral securing your loan is protected against damage, right? Wrong. The bank in this story was almost burned after the borrower's business was damaged in an extensive fire. An important fact about the insurance policy came to light: The bank's designation was not what it should have been. (Reprinted by permission of the publisher.), Several years ago, the business of one of our bank's commercial customers suffered an extensive fire, which was later determined to be a case of arson. Damages to real and [...]

The deadline to tender residential mortgage-backed securities insured by Syncora Guarantee Inc. has once again been extended, to 11:59 p.m. EDT June 22 from 11:59 p.m. June 19. The tender [...]

More advisers need to ensure their clients' protection policies are written in trust, according to Aegon. According to the provider's latest IFA Insights research currently only one-quarter of protection policies [...]

Byline: ZACK PHILLIPS As concerns rise about the financial stability of some insurers, risk managers are using various methods to address insurer solvency risks, say risk managers and other observers. [...]

Bupa Individual Protection has made a number of enhancements to its critical illness policies including extended cover and removing age limits for a wide range of conditions. The offer of [...]

Prudential has come under fire from Aviva for giving an alleged one-sided argument about severity-based cover. In a recent article in Financial Adviser (5 March) Kevin Carr, director of protection [...]

Customers on mortgage tracker deals could be paying over the odds for mortgage payment protection insurance, an independent provider has warned. MPPI provider Paymentcare.co.uk said those who have standalone insurance [...]

No-Fault . . . or Your Fault Not long ago, I received a phone call from a good friend who has been disabled for more than a year. He had [...]

As the life settlement industry grows at an accelerating pace, an increasing number of life insurance producers are opting to transact directly with life settlement providers companies that actively purchase [...]

by Nick Telfer Income protection insurance is nothing new, with roots back in the era of Victorian philanthropy. As in the 19th century, there is still an unquestionable need for [...]

Honest answers To an actuary numbers and facts are all and the marketing spin often goes right over their heads (or more likely below them). Lurking on The Actuarial Professions [...]

Norwich Union's parent company Aviva is to set the ball rolling on the reattribution of its inherited estate but policyholders will have to wait at least 18 months before they [...]

Most of the interest around the changes to the inheritance tax treatment of trusts has concentrated on lump sum schemes -' understandably since lump sums are more likely to cause [...]

Byline: SARAH VEYSEY LONDON-Insurers should use excess capital to reduce premiums for policyholders or to subsidize loss prevention programs, a leading European risk manager said. Such actions would ease pressure [...]

FUTURE proofing of critical illness definitions proposed by the Association of British Insurers could undermine public faith in financial services, according to advisers. The ABI's working party for critical illness [...]

Obstetrician Jill Thompson stopped delivering babies a year ago when her annual malpractice premium hit $125,000. She decided instead to concentrate on gynecology. 'It takes a while to grow an [...]

Nationwide has blamed the rising number of claims for its decision to raise mortgage payment protection insurance premiums. Monthly premiums for accident, sickness and unemployment cover have gone up by [...]

Last Friday saw the deadline pass for insurers who offer with-profit products to publish their principles and practices of financial management (PPFM). Most providers are expected to have met the [...]

It wasn't my fault, honest. Only the week before last I wrote about Standard Life, little knowing that within a couple of days of penning my column Iain Lumsden's name [...]

Back in the 1980s, the AIDS epidemic led to the introduction of a financial alternative known as 'viaticals.' At that time, viaticals (the name comes from Latin and means 'supplies [...]

Insurance policies are contractual documents, and just like other types of contracts, they should be managed using the best professional contracting skills. Health insurance policies: everyone needs one, not enough [...]

Agents can obtain life insurance for their special-risk clients through clinical underwriting, which treats all applicants as individuals. One of the first things agents, brokers or financial planners discover in [...]

BASIC FINANCIAL PLANNING is insufficient for high-net-worth individuals who want to leave their mark on the world after they pass away. When planning, they often ponder the meaning of their [...]

[ILLUSTRATION OMITTED] Chasing opportunity, several companies last year took 225,000 policies off the hands of Florida's state-subsidized insurer, Citizens Property Insurance. Meanwhile, Hollywood-based property management company Continental Group launched a [...]

MANY 'GENERATION Y' employees would just as soon let someone else manage their retirement savings. 'Today's youngest workers appear eager to embrace a radical design of U.S. retirement plans,' according [...]

THE AMERICAN COUNCIL OF LIFE Insurers is asking the Department of Labor to include guaranteed insurance products among those that could be used for automatic enrollment under the Pension Protection [...]

AN ARM OF THE NATIONAL Association of Insurance Commissioners is trying to find out how insurers will apply a principles-based approach to computing variable annuity reserves. The regulators hope to [...]