insurance
In the excerpt from Is the insurance business viable, Robert Ferguson, et al argues that what causes the insurance business not viable. Firstly, the traditional utility function defined by wealth was used to analysis to see whether insurance business are viable. ... ¡§the insurance business is subject to problems that have no obvious solutions¡¨ (p30). ... The problem lies in the system itself: insurance companies and consumers acting honestly in their own apparent self-interests. ... Therefore, all the low-risk class consumers are all dropping out the market, finally, all the high risk meta-class consumers left, making the insurance company not profitable or shut down. For the information asymmetry problem, customers of cause know more their self than to insurance company, therefore moral hazard will be Imagine that in today society, there is no doctor malpractice insurance such thing, doctor should try their best to protect their assets from the reach of the patient.